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Posted at: Oct 18, 2018, 12:04 AM; last updated: Oct 18, 2018, 12:04 AM (IST)

US curbs and a sense of deja vu

G Parthasarathy

G Parthasarathy
Pact signed between Indian & Russian banks would hold the key to defence payments
US curbs and a sense of deja vu
No to dollar: Indian and Russian banks will use rupees and roubles for arms deals.

G Parthasarathy
former diplomat

THE US believed that after the collapse of the Soviet Union, a new Russia could be brought to its knees by economic pressures and political manoeuvres. Washington sought to see that Moscow’s leadership remained in the hands of individuals like the occasionally sober President Boris Yeltsin. They had not counted on a young former KGB agent, Vladimir Putin, assuming leadership, determined to restore Russia’s influence in the emerging world order. Putin thwarted US-backed initiatives to undermine Russian influence in neighbouring former Soviet Republics, like Georgia and Ukraine, where Russia annexed its erstwhile naval base in Crimea. He thereafter used military assistance to successfully back the secular Syrian government of Bashar al-Assad against US- backed Islamic fundamentalists.

 Successive governments in India have wisely not made the mistake of underestimating the influence of a new Russia. While trade and investment ties have been limited in recent years, the Russians have remained reliable suppliers of frontline defence equipment to India at competitive prices. India has also joined forums like BRICS and the Shanghai Cooperation Organisation, where it can exchange views with both Russia and China on security and economic cooperation, particularly across the Eurasian land mass. Moreover, given the rise of an aggressive China, our economic, diplomatic and military ties with the US, Japan and the EU have been significantly strengthened. But, things have now come to a head, with the passing of American legislation CAATSA. This is as much to ‘punish’ Russia as to ‘enrich’ the US arms industry! US officials have testified in the US Congress that one of the main aims is to wean countries away from Russian arms purchases. 

Russia has remained a major partner for five decades now, as a reliable supplier of defence equipment and diplomatic support, especially in difficult times. Cooperation in crucial areas like our space programme continued, even when the US imposed sanctions on India after its nuclear tests. It was the inability of the US to isolate India globally, because of support from countries like Russia and France that led to Washington ending the sanctions. Washington thereafter designated India as a valued ‘partner’ across the ‘Indo-Pacific’, primarily to balance and counter China.

 The last two decades have seen a turnaround in India-US relations. American arms supplies to India, estimated at $18 billion, have included sales of maritime patrol aircraft, 130 mm artillery guns, C-17 and C-130 transport aircraft and Apache and Chinook helicopters. Further acquisitions are under consideration. This is apart from bilateral agreements for practical military cooperation and an unprecedented military agreement. Joint exercises are now a regular feature. While India shares some strategic objectives with the US, we cannot agree to give it the right to veto our acquisitions from Russia. 

The US made it clear that India opens itself to sanctions if it undertook any move to acquire the S 400 missile system from Russia. Even the US does not possess such a missile system, which we need now more than ever, given the depleted strength of our Air Force. China has already been targeted by the recent legislation for acquiring the missile system and the SU 35 advanced fighter aircraft. 

While the missile deal could be subjected to sanctions, there can be no question of demeaning ourselves by going with a virtual begging bowl to the US, asking it not to apply sanctions on every arms deal. There are several crucial weapons systems which we have decided, in principle, to acquire from Russia. These systems include the lease of another nuclear attack submarine, over 200 light helicopters to be built in India, four naval frigates, conventional submarines to be largely built in Indian shipyards, and an estimated 6 lakh AK103 assault rifles, also to be made in India. Our jawans urgently need these rifles, as the present weapons they carry are not satisfactory. 

Following the recent sanctions on arms purchases, India was faced with the prospect of its leading banks, with large dollar holdings, facing crippling sanctions if they made payments for arms purchases from Russia. The only viable alternative for India and Russia was to devise measures to sidestep US pressure. An agreement signed during Putin’s visit received little attention. This was an agreement reportedly between Syndicate Bank, Indian Bank and Vijaya Bank and Russia’s Sberbank to facilitate defence payments, in rupees and roubles. It remains to be seen whether, and what sanctions Indian organisations involved in such transactions will be subjected to. Many of them could ironically be essential partners in any defence deal, which India decides to sign with the US too. 

Three decades ago, the US threatened to cut off fuel supplies of enriched uranium for India’s Tarapur nuclear plant, unless we agreed to place all our nuclear facilities under international safeguards. PM Indira Gandhi refused to oblige and turned to France for supply of nuclear fuel. Two decades later, President George Bush ended all unilateral nuclear restrictions on India. One hopes that this will be remembered by the US, when it comes to its ill-advised sanctions on acquisitions of Russian arms by key Asian countries like Vietnam and Indonesia also. The US will derive no benefit from the application of sanctions.

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