Foreign Policy Watch: India-United States

[op-ed snap] Managing the turbulence in India-US relationsop-ed snap


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Mains Paper 2: IR | Effect of policies & politics of developed & developing countries on India’s interests, Indian diaspora.

From UPSC perspective, the following things are important:

Prelims level: CAATSA, 2+2 dialogue

Mains level: Secondary sanctions policy of the US and its possible impacts on India


Context

Hard times for India-US relationship

  1. The US has asked all countries, including India, to reduce oil imports from Iran to zero by 4 November
  2. If India fails to do this, its companies will face the same sanctions as any other violator of this American diktat
  3. This comes against the backdrop of more potential friction building up between the two countries
  4. India is in the process of purchasing S400 surface-to-air missile systems from Russia which could mean more sanctions for New Delhi, as per a US law called “Countering America’s Adversaries Through Sanctions Act” (CAATSA)
  5. In addition to these issues, US President Donald Trump has been quite vocal about the tariffs imposed by India on American goods
  6. Also, the proposed 2+2 dialogue has been canceled unilaterally by the US

What can India do in these turbulent times?

  1. India needs to make a clear distinction between the sanctions that it will face on account of importing oil from Iran and those that will result from India’s defense partnership with Russia
  • There are many private companies involved in the process of importing oil from Iran, primarily in the shipping, insurance and refinery sectors which by the fear of being cut off from the US will most likely pull out of Iran
  • By hurting India’s defense acquisitions from Russia, the US is putting itself in the line of fire as India is the world’s largest arms importer and the US has made rapid strides in this market in the past decade. Future deals with the US could be affected by this move
  • American objectives are far clearer in the case of Iran where Mr. Trump wants to significantly degrade Iranian capabilities to acquire nuclear weapons and to interfere in other countries in the region

What is the US policy?

  1. American sanctions are always more effective in countries which are economically integrated with America than those which are not
  2. The US uses its economic and military links as leverage in its non-proliferation goals
  3. The US seeks the support of other countries to build a tighter multilateral sanctions regime
  4. When this support doesn’t come voluntarily, the US uses secondary sanctions to extract coerced support from other countries
  5. Being cut off from the American market and financial system is too high a cost to pay for defending a country like Iran

Way forward

  1. India’s acquisition of Russian-made S400 missile systems can be managed at the level of the government and public sector, with little role for private companies
  2. This suggests that India should stay firm on the S400 deal
  3. On Iran, New Delhi may not be left with many options
  4. The Indian response will have to be in light of the American threat of secondary sanctions for importing Iranian oil
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