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May 13, 2019

Indo-US Ties at a Time of Global Fluidity

Indian foreign policy is in a sweet spot these days. Wooed by major powers of all hues, it can afford to work with everyone, even if at times the pulls and pressures seem contradictory. This was even reflected at the G20 summit in Buenos Aires in December 2018 where New Delhi managed to pull off two seemingly contradictory trilaterals. Modi met with United States President Donald Trump and Japanese Prime Minister Shinzo Abe to underscore India’s firm commitment to make the Indo-Pacific a region for shared economic growth, prosperity and security. Asserting that India will “continue to work together on shared values,” Modi said, “When you look at the acronym of our three countries — Japan, America, and India — it is ‘JAI,’ which stands for success in Hindi.” Abe hoped that the trilateral would reinforce the trilateral partnership and its close cooperation “towards realising a free and open Indo-Pacific.” Trump also acknowledged that “… the relationships between our three countries is extremely good and extremely strong… with India, maybe stronger than ever… We are doing very well together. We are doing a lot of trade together. We are doing a lot of defence together, a lot of military purchases.” The three nations shared their views on progressing a free, open, conclusive and rule-based order in the Indo-Pacific region, based on respect for international law and peaceful resolution of all differences.

The Indo-Pacific construct is now at the centre of strategic jockeying in the region and the three nations have been trying to define the exact scope of their engagement. Modi had explained India’s stand on the strategic Indo-Pacific region in his keynote address at the Shangri La Dialogue in Singapore in June. “India does not see the Indo-Pacific Region as a strategy or as a club of limited members. Nor as a grouping that seeks to dominate. And by no means do we consider it as directed against any country. A geographical definition, as such, cannot be,” he had said. But China’s rapid rise and the challenge it is posing to geopolitical stability is at the heart of the evolution of the Indo-Pacific and the trilateral in Argentina reinforced the desire of the three states to take it forward.

Hours after the ‘JAI’ trilateral, Modi joined Chinese president Xi Jinping and Russian President Vladimir Putin for another trilateral – the ‘RIC’ – the second among the three countries after a gap of 12 years. The underlying rationale for this trilateral was quite different as the three nations discussed enhancing mutual cooperation in international forums. According to the Indian Ministry of External Affairs: “They agreed on the importance of reform and strengthening of multilateral institutions that had benefitted the world, including the United Nations, WTO and well-established as well as new global financial institutions. They underscored the benefits of a multilateral trading system and an open world economy for global growth and prosperity.”

While the factor China is the one driving ‘JAI,’ it is the Trump Administration’s challenge to the global economic order that is largely behind India’s outreach to China and Russia. The fact that New Delhi managed to pull this off is a tribute to Modi’s astute investment in managing major power relations over the last few years. This is a period of fluid partnerships and Indian diplomacy will have to be nimble enough if Indian interests are to be preserved. Modi’s engagements at the G-20 underline that New Delhi is capable of managing this fluidity and continuing to construct a robust partnership with the US.

Defying threats of US sanctions, India signed a $5.4 billion deal to buy the S-400 Triumf air defence missile system from Russia during President Vladimir Putin’s visit to New Delhi in October 2018. This is one of the biggest Indo-Russian defence deals in recent times with expectation in some quarters that it could revive an otherwise flagging Indo-Russian relationship. During the visit, the two nations “reaffirmed their commitment to the Special and Privileged Strategic Partnership between India and Russia,” and underscored the value of multipolarity and multilateralism.

The US response to the deal was quick and terse, and India’s move could attract sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) on defence purchases from Russia, approved by US Congress 98 to 2 in 2017. While underlining that the Act is not aimed at stymieing military capabilities of American “allies or partners” and that the intent is “to impose costs on Russia for its malign behaviour, including by stopping the flow of money to Russia’s defence sector,” the United States made it clear that waivers would be considered on a “transaction-by-transaction basis.” More ominously, US President Donald Trump suggested that India would soon “find out” if the punitive sanctions apply over the Russian deal as the State Department argues such deals are “not helpful” and the US is reviewing them “very carefully.”

Indian defense planners view the S-400 as a key capability enhancer as it can track multiple incoming targets including aircraft, missiles and unmanned aerial vehicles up to 400 kilometers in distance and 30 kilometers in altitude. With the deal, India has ensured that Russia will remain the main supplier of high-tech defense equipment for the foreseeable future while challenging Washington on an issue now regarded as the primary national security challenge by many in the United States.

It is no surprise, therefore, that this was among the main issues during the inaugural 2+2 dialogue in September 2018 between the foreign and defense ministers of India and the United States. Officials signed a Communications Compatibility and Security Agreement, or COMCASA, one of four foundational agreements that the United States signs with its closest defence partners to facilitate interoperability between militaries and sale of high-end technology. The General Security of Military Information Agreement was signed in 2002 and the Logistics Exchange Memorandum of Agreement in 2016, and so this one had been pending for some time. The final agreement required is the Basic Exchange and Cooperation Agreement facilitating geospatial exchange, and negotiations have yet to start. COMCASA is expected to facilitate access to advanced defence systems and enable India to optimally utilize its existing US-origin platforms.

Even under an administration as mercurial and transactional as President Donald Trump’s, Indo-US relations have managed to gather momentum, shaped by the underlying strategic logic of the convergence between the two nations. India has managed to find a central place in the Trump administration’s strategic worldview as outlined in the National Security Strategy and National Defense Strategy. Both on China and Pakistan, the Trump administration has demonstrated a willingness to push the boundaries – this is reflected in its approach to make India more integral to Asian balance of power as outlined in the US Indo-Pacific strategy as well as in an attempt to reshape the contours of America’s South Asia strategy, which acknowledges India’s centrality in the future of Afghanistan while recognizing Pakistan as the source of the problem.

The US position in the Indian defence matrix has also evolved with India buying $18 billion worth of defence items from the United States since 2008, though the much-hyped Defense Technology and Trade Initiative aimed at boosting joint development and co-production of defence equipment fails to live up to expectation so far. The 2+2 dialogue saw the two nations focusing on enhancing private defence industry collaboration, helping Indian defence manufacturers to join the US military supply chain, thereby boosting the Modi government’s “Make in India” initiative as well as placing innovation at the heart of this defence collaboration. Given these high stakes, both US Secretary of State Mike Pompeo and Secretary of Defense James Mattis have supported waivers for India on its weapon deals with Russia.

The United States imposed sanctions in September on Chinese entities for their S-400 deal. If Trump makes an exemption for India, that would have global reverberations. Already, suggestions are emanating from Beijing that India and China need to deepen cooperation to fight trade protectionism in the wake of the unilateral approach adopted by the United States on trade-related disputes. China is taking a new cooperative approach towards India, and the Trump administration’s outreach is part of this complex equation.

The other challenge facing Indo-US relations is the persistent question of Iran. After Trump withdrew from the international deal for containing Iran’s nuclear weapons program in May, he signed an executive order officially reinstating US sanctions against Iran. The full weight of these sanctions come into force on November 4 despite most of the world opposing Washington’s move.

India regards it a priority to obtain waivers from Washington. The country is the second largest buyer of Iranian oil after China. Indian firms have already started feeling the pressure of US sanctions, reducing oil intake from Iran, though that is unlikely to come down to zero. Iran accounts for around 10 percent of India’s total oil imports, and Reuters reported that Indian refiners reduced monthly crude loadings from Iran for September and October by nearly half from earlier this year. Also, New Delhi is in a quandary as falling rupee and rising oil prices are generating public pressure. In this context, India would be hard pressed to ignore Iran and its concessionary rates on oil purchases. Two Indian oil firms have placed orders to import Iranian crude, and in an attempt to bypass US sanctions, New Delhi is trying to evolve another payment system to buy Iran’s oil and use Indian rupees.

On the questions of both Russia and Iran, India has indicated that it must keep its channel of communications with the United States open, and Washington has indicated that it remains sensitive to Indian needs. Equally interesting is that there have been no public spats between India and the United States on these issues – a sign of growing maturity in the relationship. Sanctions on India would be counterproductive to Indo-US ties by pushing India into a Russian embrace and jeopardizing Indian interests in the Middle East. Washington has far better appreciation of Indian sensitivities today, and New Delhi displays more skillful strategic posturing when it comes to the United States. Giving in to American public pressure on these issues would open New Delhi to charges of giving up its “strategic autonomy” – a charge any Indian government would like to avoid with elections around the corner.

The 2+2 joint statement has talked of the need “to ensure freedom of the seas, skies, uphold the peaceful resolutions of the maritime disputes, promote market-based economics and good governance and prevent external economic coercion.” So long as the two sides can keep the focus on the big picture, differences on Russia and Iran are not likely to alter the broader trajectory of the relationship between the world’s two great democracies. Modi’s contribution in keeping a robust partnership with the US on track has been key in more ways than one.

(Prof. Harsh V. Pant is a Professor of International Relations at King’s College, London and

Head of Strategic Studies at the Observer Research Foundation, New Delhi. Views expressed are personal.)

(This article is carried in the print edition of May-June 2019 issue of India Foundation Journal.)




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