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What is the issue?
The India-Russia Annual Summit was held recently in India, with uncertainty over US sanctions for defence deals.
Given this, it is essential to understand the significance of the meet and the US's role in India-Russia relations.
Why is the recent meet significant?
Autonomy - The S-400 contract was signed in a low-key manner, with no mention in press statement by the leaders.
Nevertheless, it was clear assertion of autonomy of Indian decision-making on Russia.
Neighbourhood - International issues of mutual interest, especially on terrorism, Afghanistan and the Indo-Pacific were discussed.
On Afghanistan, India expressed support for the “Moscow format”.
Under this, Russia involves regional countries and major powers in an effort to draw the Taliban into negotiations with the Afghan leadership.
The U.S. has boycotted this initiative, but has initiated its own dialogue with the Taliban.
A U.S. Special Representative for Afghanistan is now touring Afghanistan, Pakistan, the UAE, Qatar, and Saudi Arabia.
This is to generate help in bringing the Taliban to the negotiating table and notably, India is not on his itinerary.
On Pakistan, significantly, the recent Joint Statement mentions cross-border terrorism, which some earlier Joint Statements did not.
Business - India and Russia have set a target of $30 billion bilateral trade by 2025.
There are clear opportunities for cooperation between Russia (natural resources-rich) and India (resource-hungry).
But even before CAATSA, there was confusion in India about sanctions against Russia.
The U.S. and European sanctions on Russia between 2014 and 2016 are sector- and currency-specific.
They affect entities operating in Europe and U.S., and transactions in euro or dollar currencies, and are not applicable to other geographies or currencies.
This remains the case, even post-CAATSA, for all sectors other than defence and energy.
The economic engagement of major European countries with Russia has actually grown in 2017 and 2018, despite the sanctions.
European and American corporate lawyers with expertise on sanctions have enabled this.
So with proper structuring of business deals, trade and investment exchanges with Russia are possible, without losing business with Europe and America.
Indian business needs to tap into this expertise, as utilising the business opportunities largely depends on this.
What is US's role in India-Russia relations?
India balancing its relations between the U.S. and Russia has been a challenge for quite some time.
India has emphasized earlier that its growing proximity to the U.S. would not affect relations with Russia.
Given this, the recent summit was centred over the challenges in sealing the S-400 deal.
As, the U.S. has been publicly warning for months that the purchase could attract sanctions.
The recent India-U.S. 2+2 meeting (of Foreign and Defence Ministers) also did not resolve this issue.
What is the way forward?
Every potential India-Russia defence deal could be subjected to a determination on applicability of US sanctions.
Given the political dynamics in the U.S. today, a systemic solution to this problem is not evident.
However, it has to be on the India-U.S. dialogue agenda as the strategic partnership between both is based on a strong mutuality of interests.
Nevertheless, the partnership is not intended to have the exclusivity of an alliance.
So India should not have to choose between one strategic partnership and another.
The India-Russia dialogue should not get inextricably entangled in the India-U.S. dialogue.
