India, Russia seek to skirt US sanctions threat to arms deals

3 min read
  1. Russia and India have agreed on a new mechanism which will allow payments for multi-billion dollar defence deals to be made using their own national currencies.
  2. This mechanism was established after Indian banks with exposure to the US had suspended payments and instalments to Russia to avoid the threat of punitive sanctions under Countering America’s Adversaries through Sanctions Act(CAATSA).
  3. Further,the US administration has also been persuading India to cancel the Russian S-400 missile defence system.India had signed a $5.4 billion deal to purchase five batteries of the Russian S-400 Triumf missile system in 2018.
  4. Russia has been struggling to maintain sales of its defence sector because of U.S. sanctions that threaten anyone who buys Russian weapons.
  5. According to the Stockholm International Peace Research Institute, Russia,which is the second largest arms exporter after the US has suffered a 17% drop in foreign weapons deals from 2014-2018 amid declining purchases by India and Venezuela.
  6. India also has long-time strategic ties with Russia dating back to the Soviet era in the Cold War.Despite the decline in sales,Russia still accounted for 58% of the South Asian nations arms imports from 2014-18.
  7. The 2017 act of CAATSA requires the imposition of sanctions on persons and entities that knowingly engaged in a significant transaction with Russia’s defence or intelligence sectors. 
  8. The U.S. State Department decides whether a transaction is significant under the legislation while the 2019 National Defence Authorization Act provides for a presidential waiver from sanctions.
  9. S-400 Triumf Missile System is a mobile, surface-to-air missile system (SAM).It is capable of engaging aircraft, UAVs,cruise missiles and has a terminal ballistic missile defense capability. It has an operational range of over 400 kms.
  10. The S-400 Triumf is known as the SA-21 Growler by the North Atlantic Treaty Organisation (NATO).NATO members consider the S-400 a major threat because of its long range.