Why Donald Trump's fixation on trade issues can hurt India
The 2+2 dialogue between the Foreign and Defence Ministers of India and the US on September 6 occurred in the backdrop of global turbulence created by Donald Trump’s policies, revived Cold War atmospherics between US and Russia, the onset of a trade war between the US and China, threats to the security of the IndoPacific region represented by China’s maritime ambitions, and the slump in US-Pakistan ties.
Close attention
China, Pakistan, Russia and Iran would have paid close attention to the dialogue’s outcome. The US now openly seeks curtailment of India’s defence ties with Russia. Under CAATSA any country engaging in a significant defence transaction with Russia can be sanctioned by the US. The President has received waiver authority for six months at a time, but it is conditional on the country receiving the waiver to demonstrate reduction of arms purchases for Russia and increased purchases from the US.
On India’s purchase of the S-400 air defence system from Russia, US Defence Secretary Jim Mattis was quoted as saying that while no waiver decision had been taken, the S-400 was a “legacy platform” and that the waiver authority should be exercised in a way that is appropriate and lawful and only when it makes sense.
US Secretary of State Mike Pompeo too has made accommodative remarks to the effect that the US understood India’s relations with Russia, would work on the issue and not penalise great strategic partners like India. A waiver on S-400, therefore, appears likely but CAATSA will loom over future large defence deals with Russia and will serve to induce India to buy more American arms. CAATSA can potentially cause serious damage to India-US relations because decision-making on defence is a sovereign act and dictation by a third party invites resistance. A permanent CAATSA waiver is required for India to take decisions on defence purchases in enlightened self-interest and not under duress.
India’s decisions on energy security too should not follow US dictates. To compel India to reduce oil supplies from Iran to zero by November 4, failing which it can be exposed to sanctions under US law, is unconscionable. Trump’s decision to repudiate the Iran nuclear deal which his predecessor had negotiated and whose merits he had vaunted was arbitrary. Domestic US politics and regional biases should not seek to derail relations between India and Iran.
India has some durable strategic interests in Iran, be it energy, transit corridors and the evolving situation in Afghanistan, and these cannot be sacrificed at America’s will.
With oil prices rising, India’s energy import bill mounting and Iranian oil favourably priced, India is being put in a difficult situation. India’s strategic partnership with the US should be based on mutuality and not coercion. Here too, Pompeo, judging by his public remarks, has indicated that the US may take a flexible attitude by recognising that countries like India “will take time to unwind” though India had been told that on November 4 sanctions will be enforced.
India can certainly reduce its oil off-take from Iran in the coming months, not because of government volition necessarily but decisions by private sector companies unwilling to risk US sanctions. Hopefully, the US will be satisfied with reduction and not insist on a maximalist position to forestall a mutually damaging stand-off. Exclusion of the Chabahar port from CAATSA’s purview in view of its strategic importance for Afghanistan and for facilitating an enhanced Indian role there which US is encouraging would make sense.
China concerned
China has frequently voiced concern at the growing strategic India-US cooperation, seeing it as directed against China. Officially, China has played down the 2+2 dialogue and its outcome, presumably because it would not serve its purpose to exhibit nervousness at a time of mounting pressure from the US and preserve the Wuhan spirit with India as well. The references both to the Indo-Pacific and the Belt and Road Initiative (without naming it) in the India-US joint statement are worded moderately when they could have been enunciated more strongly, if the intention was to send a sharper message to China. The 2+2’s underlying message to China is clear though.
The 2+2 dialogue has reiterated shared concerns about inadequate action by Pakistan to curb terrorism on its soil, with Pakistan asked not to allow “territory under its control” (a reference to PoK) for launching terror attacks against other countries and bring to justice those involved in “cross-border” attacks on India. However, the US is still hesitating to impose tough sanctions on Pakistan. Bilateral aid reduction alone will not bend Pakistan’s because China’s financial commitments to Islamabad far exceed those of the US.
Strategic issues
The COMCASA agreement was the most important outcome of the talks, though building blocks for more intensive defence cooperation, including defence manufacturing, have been laid. With the US showing flexibility, COMCASA has been tailored to meet India’s requirements and concerns about our own communication network becoming vulnerable would seem to have been addressed. A real-time exchange of sensitive information would be made possible by this agreement.
Trade issues were underplayed during the talks, though Pompeo listed US expectations generally. The US has threatened to review GSP benefits it offers India if its several demands are not met. Trump is fixated on trade issues at the expense of broader strategic considerations and this can raise problems ahead because without a balance between the two the India-US relationship could suffer hiccups.
(Courtesy of Mail Today)
Also read: The US-India 2+2 Dialogue: When two plus two may not make four