Expert Speak Raisina Debates
Published on Oct 03, 2019

The Trump administration’s withdrawal from the Iran Nuclear Deal, its imposition of Iran oil sanctions, its withdrawal from the Paris Climate Accord, and the passage of the Countering America’s Adversaries Through Sanctions Act (CAATSA) — all have policy implications for India. We bring you (edited) highlights from the speakers’ comments of ’India On The Hill 2019‘ panel — ‘Navigating US Foreign Policy Priorities and Sanctions.’

India-US relationship is built on the compact that alignment doesn’t require loss of strategic autonomy

The challenges 

Jeff Smith

I think Prime Minister Modi’s first term was a remarkably productive one for India-US relations, particularly the first four years, toward the end of the Obama administration's second term, the first year of the Trump administration. STA-1, the Quad, inaugurating a 2+2 dialogue, bringing an Indian representative to CENTCOM, there was a lot that was done that had been on the wish list for some time. But I have to admit that over the last year or a year and a half, there have been new challenges in India-US relations. That is not necessarily a bad thing, it may actually be a symbol of how good things have been for the past decade. For the most part, the challenges fall into two categories — economic issues, tensions and sanctions, third party countries.

Iran sanctions 101 in the context of Indian oil imports

In November of 2017 the Trump administration announced it would be imposing new sanctions on countries importing oil from Iran. India was one of the largest importers of Iranian oil. So, naturally it was a target. At the time it issued 6-month waivers to several partner nations to give them time to wean off Iranian imports. In May last year when that 6-month period was up, against my advice, they decided not to extend those waivers to any country, including India, at the time of India’s election. I didn’t think it would be possible for India to wean off Iranian oil in such a short period of time but from what evidence we have in the public realm, that has in fact happened, probably in no small part due to the fact that US oil exports to India have been surging in recent years from zero in 2016 to nearly ten million barrels in 2017, to 48 million barrels in 2018, to potentially a 100 million barrels this year. This is the basic surface level of the Iran sanctions issue.

CAATSA sanctions and India’s defence imports from Russia

The second issue is CAATSA dealing with Russia. In July 2017, the US Congress passed this CAATSA legislation. It was a bipartisan effort, Republicans and Democrats agreed that we should find a way to punish Russia for election interference, among other nefarious activities. They also in effect wanted to tie the administration’s hand and force it to take a tougher posture toward Russia. They essentially said any entity engaging in a significant transaction with Russia’s defence or intelligence sector would be subject to a series of sanctions and it listed roughly 10 possible sanctions and said you have to pick five should you find anyone doing business with Russia. This was obviously a problem for India which still imports the majority of its defence hardware from Russia. That share has been declining as America’s has been rising, but they are still at 58% roughly of Indian defence imports over the last five years. India has continued purchasing Russian defence equipment, most notably to include the S400 air defence system and there has been a great deal of discussion on whether that will eventually trigger CAATSA sanctions.

“Sanctions are better than war”

I think when North Korea sinks a South Korean Corvette unprovoked, for no reason, there should be consequences and sanctions should be a tool. I think when Pakistan supports and fosters Islamic militant groups to conduct terror attacks in other countries, it should be subject to sanctions. There should be a cost to that activity. I also agree that Russia and Iran have been engaged in extremely problematic behaviour that probably deserves sanctions as well. They must pay a cost for interfering in US elections, for targeting American troops in Iraq, for sponsoring terrorist outfits. Sanctions are better than war.

“We have already sanctioned Iran and Russia to death”

With Iran and Russia, we have already sanctioned them to death. We already don’t do business with Iran and Russia. So what do we do? We turn to secondary sanctions. With India I think there are both practical and strategic problems created by these secondary sanctions policy. There is probably only one thing Russia would like more than selling India the S400 and that would be to create a rift in India-US relations.

“India is not going to stop purchasing Russian hardware”

We must find ways of punishing Russia, which is our intent, without harming our own interests and our own partnerships. I would argue that denying India technology like a fifth generation fighter would be punishment enough for purchasing the S400 system. I don’t think we need to go with the secondary sanctions route. India still doesn’t know if it is going to face CAATSA sanctions for the purchase of the S400. We still haven’t said whether or not it would get a waiver. India is not going to stop purchasing Russian hardware. It has already purchased several systems since the S400. So you now have multiple potential sets of CAATSA sanctions that have to be reviewed that could be used as leverage by a future executive branch official for things not related to the topics at hand. So, I think it creates several practical problems in India-US relations.

“India-US relationship is built on the compact that alignment doesn’t require a loss of strategic autonomy”

The foundations of the India-US relationship have been built on a compact. The United States has been able to draw India away from its non-alignment past by essentially promising that alignment with the US doesn’t require a loss of strategic autonomy, you can still continue making independent decisions even as you move closer to the United States. You won’t be dragged into US conflicts, you won’t be used as a pawn, you won’t be following American dictates. Alignment doesn’t mean a loss of autonomy. The US has largely held to that compact but I think CAATSA threatens that when we say we are going to tell you who you can and can’t buy from. I think that creates a problem in India. We will force you to make costly economic and foreign policy decisions based on our problems with other countries. I think when dealing with a peer like India, fairness and reciprocity should matter. I don’t think the United States would like it if India turned around and said, Pakistan is very problematic, they are sponsoring terrorism, as long as you have a relationship with them we are going to stop doing business with you.

Jeff Smith is Research Fellow at The Heritage Foundation.

Mitigating damage because “that is what partners do”

Dhruva Jaishankar

Six salient characteristics of the Trump foreign policy

It has now been almost 3 years after President Trump’s election, and a little over two and a half since his inauguration as President. If you were to take the salient characteristics of what Trump’s foreign policy is, a few things come to mind. First, a scepticism of multilateralism. This manifests itself in the withdrawal from the JCPOA, the Iran nuclear deal, from the Paris climate agreement, to some extent from the Trans-Pacific Partnership. Two, an emphasis on burden sharing. This relates primarily to US allies NATO, Japan, South Korea but also to partners such as India in the context of Afghanistan and the Indian Ocean. Three, ending the so-called endless wars: Iraq, Syria and possibly now Afghanistan. Four, somewhat counter-intuitively, less reluctance in using force for political objectives and you see this in the South China Sea where the tempo of freedom of navigation operations has increased, in Afghanistan in terms of lethal weaponry to Ukraine and in Syria as well. A strong focus on adversarial relationships, four of which are standout in particular: China, Iran, Russia and North Korea, all of which feature prominently in the national security strategy put out by the White House. Five, rewriting the terms of trade to be more favourable to the United States and the USMCA, NAFTA 2.0 is one manifestation of that. Finally, rewriting the terms of immigration as well.

How much Trumpism will survive the Trump presidency?

One thing to keep in mind is how much this ‘Trumpism’ will survive the Trump presidency. How much of this will, at least to some degree, influence US foreign policy going forward? What does this mean for the US-India relationship? You could put the consequences of these policies into three baskets. One is largely positive opportunities, one category is of largely negative implications and some of mixed results. On the positive side of the ledger the biggest opportunities come in the Indo-Pacific sphere and security cooperation there. Some of it started in the last couple of years of the Obama administration. The Trump administration has taken it forward significantly, given it a new nomenclature and some teeth.

Growing convergence in West Asia

A second area, less noticed and perhaps most subtle, has been growing convergence in what in India we call West Asia what in the US you call the Middle East. Again this is due to regional dynamics, amongst other things the growing convergence between the GCC countries or most of the GCC countries and Israel. But this has also opened up room for India to deepen its ties with US allies and partners to India’s west as well. Some areas of the bilateral relationship have also blossomed. I think STA-1 elevation is a clear indication of that. The energy relationship also taking off. So that is clearly on the positive side of the ledger.

“Some areas of the bilateral relationship have become more complicated”

The downsides are quite clear. Iran has been discussed at length and we have had to wrestle with the consequences of that. Russia is another. I think it is notable that you had people like former Secretary of State Rex Tillerson, and former Secretary of Defence Mattis publicly advocate for exemptions for India with Congress, which indicates to some degree how it was understood, for it to have a secondary order of effects. Again, some areas of the bilateral relationship have become more complicated, cooperation on climate change for obvious reasons no longer features prominently on the agenda. Immigration has become complicated but also due to domestic developments here, we have not really seen the worst implications of that playing out.

Finally, in the mixed category, is Afghanistan. We have moved quite a long way from ten years ago where I remember many American officials advocating that India should stay out of Afghanistan. This was not to de-legitimise the Indian presence there, even though what India was doing in terms of State building efforts actually complimented US objectives. The fact that Trump is actually calling for India to play a greater role today I would see as a positive sign, even if the level of coordination has not always been up to the mark.

Finally, the (US) effort of rewriting the terms of trade globally could have some positive implications for India, which also enjoys a massive trade deficit with China.

The questions going forward will be two-fold. How much of this is structural, how much of this will become part of US foreign policy going forward. Some of this will be mandated by legislation. It won’t just be a consequence of the presidential election next year. I think even in the areas where if you were to list all the challenges — trade, Russia, Iran, Afghanistan being the most prominent — we have found ways of trying to mitigate the damage and that is what partners do, that’s my thought.

Dhruva Jaishankar is Director of Observer Research Foundation’s US initiative.

A South Asia policy

Suhasini Haidar

When the US says it is walking out of Afghanistan, it creates space for others to walk in

What has the Trump effect meant? It has meant the retrenchment from the international world order, walking out of deals that the US had committed to, climate change, Iran, TPP, UNESCO, Human Rights, there is just a lot of walkouts over there. When the US really looks away from what was happening in Yemen, the Middle East and says it is walking out of Afghanistan, it creates space for others to say well then who is going to walk in. So that is one part.

China from an Indian point of view

From the Indian point of view, I can’t just see China as the US would like me to, through this prism of this Indo-Pacific reality, because I have a maritime reality, I also have a terrestrial reality, and it’s more than 3,000 kilometres long as the Doklam crisis reminded us. The third challenge I have from China as an Indian is the one in South Asia. The inroads that China has made in the region not just vis-à-vis Pakistan but with every neighbour that I hold dear. So I am looking at the retrenchment of the US, its desire not to be involved in a lot of these things and creating spaces, I am looking at the rise of China which I have to deal with in a bilateral way, not as part of some alliance, and I am looking at the Russia-China axis that is coming closer.

The costs of giving up on trade with Iran

Look at the asks: Don’t buy Iranian oil which is the most cost effective oil as far as India is concerned and it doesn’t just mean that India has lost out buying Iranian oil which its refineries are best suited for. It has also given up on Iranian trade and the ability to have leverage in a country where it actually has seen for itself a strategic alternative to this constant problem of being blocked by Pakistan.

“No ‘ask’ comes without a cost”

Next ask, don’t buy Venezuelan oil. That is just fine, it’s okay, but it is an ‘ask’. You are making us choose between the two at a time when oil suddenly has gone up and our options are getting more limited. Do not allow Huawei into 5G trials. Finally don’t buy Russian missile systems. So we have got all these asks just in the last year, since January 2018, and none of those asks come without a cost because increasingly in the world we are being told that you have got to take buffet options. The cost on China is very clear if India decides not to go ahead with Huawei after the US has made this ask. We lose out when it comes to the negotiation with China. As I said we might do that independently but at a cost.

“You can’t have a country like India standing there and not being involved in negotiations”

Two years ago in 2017 Mr. Trump announced a South Asia policy for Afghanistan. It was built on three pillars. It was built on the pillars that the US would not have a time bound exit from Afghanistan, that the US was going to work on putting Pakistan on notice when it came to terrorism, and it was going to work with New Delhi and Kabul. None of those three pillars seemed to be standing by the time we got to the negotiations. Then we were told in the negotiations that there were four pillars to the negotiation: a ceasefire with the Taliban, intra-Afghan dialogue, a commitment on terrorism and not allowing terror groups inside Afghanistan and the US withdrawal. I would posit to you that I don’t even know where most of that deal has gone. So you can’t have a country like India standing over there not being involved in the negotiations, not being told what is going to happen and expect us just to trust that the best will happen. It is getting a little difficult to trust all of these instincts and say yes but we must put it aside to deal with the issues as India and the US together, because we know each other. Yes, we do know each other but I think it is necessary to see the world outside in as much as you are looking inside out.

Suhasini Haidar is Diplomatic Editor at The Hindu.

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