Will India circumvent sanctions on Russia? Lessons from Iran sanctions

In the wake of Russian invasion of Ukraine, a slew of sanctions were imposed on Russia. These sanctions target banks, military exports, and oil refineries. But it is questionable whether the sanctions will work. China, India and many other countries are unlikely to toe the line.

But it is not India or China but Pakistan which the West considers a bête noire. In a joint letter, 22 Islamabad-based diplomats wrote a coercive letter to the Pakistan government to fall in line. Pakistan‘s prime minister retorted that his country was not a slave to any government’s policies. It is eerie that despite India’s abstention at the UN no-one chastised it.

India’s dependence on Russia

It is India not Pakistan that imports a lot of military hardware from Russia. India understands that without sustained military supplies, 60 percent for the three services, from Russia it can’t keep up its military posture against its twin enemies, China and Russia.

India’s department of military affairs is mulling innovative ways to bypass the sanctions. Both countries have commercial experience in bypassing sanctions.

In August 2021, Victor N. Kladov who heads Rostech announced that his country had fructified military deals worth $15 billion with India t since 2018.

These included the $5.5 billion purchase of five Almaz-Antey S-400 Triumf self-propelled surface-to-air (SAM) missile systems,building four Admiral Grigorovich Project 1135.6M frigates for $2.5 billion and licence-producing 601,427 Kalashnikov Ak-203 assault rifles for $960 million. Besides, leasing a follow-on Project 971 ‘Akula’ (Schuka-B)-class nuclear powered submarine (SSN) 2025 onwards for the Indian Navy (IN), for a decade would cost $3 billion, raising outlay to nearly $12 billion just for these four aforementioned weapon systems.

Add to it  payments for launchers and missiles for the IAs 9K338 Igla-S (SA-24 ‘Grinch’) man-portable air-defence systems, 300 mm rockets for Smerch multiple rocket launchers, and 125 mm Mango armour-piercing, fin-stabilised, discarding-sabot ammunition for T-90S main battle tanks or MBTs, alongside miscellaneous ordnance.

In July 2018, India signed a $654 million contract to execute the mid-life upgrade of four of its legacy ‘Kilo’-class Type 877 diesel-electric submarines. The procurement is underway for purchase of spares and components for over 700 of the IAF’s fixed wing fighter and transport platforms and helicopters, the IA’s over 3,000 T72M1 and T-90S MBTs and some 2,000 BMP Infantry Combat Vehicles, as well as the Russian aircraft carrier and its aerial combat complement.

India has already made the 15% advance payment of around $2.25 billion to Russia for major purchases. India still owes to Russia $12.75 billion for deliveries.

In August 2019, Russia’s VTB Bank signed currency deals with counterparts in India and China to dodge the Washington-imposed Countering America’s Adversaries through Sanctions Act (CAATSA).

In August 2018 India and Rosonboronexport, Russia’s defence export agency, entered into an agreement by which the public sector Syndicate Bank in Delhi agreed to directly transfer rupees/roubles to Russia’s Sherbank, doing away with normally routine letters of credit. The first tranche of the equivalent of $40 million was transferred in rupees/roubles in September 2019 as payment for the retrofit of one IN ‘Kilo’-class boat.

Since the mid-1960s, India had acquired over $70 billion worth of weapons from Moscow, of which more than half, or $35.82 billion, was procured between 2000 and 2020, according to the Stockholm International Peace Research Institute.

Russia’s ambassador designate to Delhi Denis Alipov pointed out those mechanisms still existed for bilateral defence trade between India and Moscow. He added much depended on the ‘readiness’ of Indian partners, overcautious over their financial exposure to the US and European markets, to continue doing business despite sanctions.

The general opinion in India, as expressed by military circles,  is that  it was ‘imperative’ for the MoD to find ways to pay Russia for varied materiel, without which the operational capability of India’s armed forces would be ‘severely undermined’ over the next 12-18 months. Currently the Indian armed forces have to depend on existing spares inventories, war wastage reserves and ultimately on cannibalising equipment to maintain operational clout.

Futile impact of sanctions on Iran

It was the US itself, who during the Shah’s days encouraged Iran to develop a nuclear programme, whether for peaceful or non-peaceful purpose

Despite IAEA rebukes and tighter sanctions, Iran did not shelve its nuclear enrichment programme. Regime change remained a far cry. The only visible impact of the sanctions was demonstrations against chicken prices (a staple food) and rising unemployment. Iran’s exasperating non-cooperation continues despite a flurry of warnings, including those from the White House and 10 Downing Street.

Were the sanctions imposed after due thinking?

Several writers, including John Galtung, Miroslav, Wallensteen, Schlesinger, Hufbauer, Garg, Jefferey Scot, Kimberley Elliot, Nye and Franklin L Levin have tried to define, illustrate and classify sanctions. Generally, sanctions are categorised as diplomatic, communicative and economic, but they are complex in their impact.

Experience of sanctions in some countries reflects that they strengthen ‘evil’ regimes instead of weakening them. In response to the seizure and detention of American diplomatic and counselor personnel in Tehran, the US froze Iranian assets and called upon the allied governments in 1979 to take similar action and halt their trade with Iran. The European industrial powers announced to cooperate. But, one by one, they resumed their commercial ties with Iran.

Isn’t it eerie that despite US restrictions, Iran never fell short of parts for her refineries or the American rail track? Several European multinational banks declined to declare Tehran in default on its financial obligations and thereby mitigated the effect of the US sanctions.

Concluding remarks

Cases of ineffective sanctions on several countries abound. In the wake of the Soviet invasion of Afghanistan, the US halted export of 17 million metric tons of grain to the then USSR. But Australia, Argentina, Canada and the European Union defied the sanctions. As a result, the Soviet Union was able to import 31 million metric tons of grain. The US’s ban on oil and gas equipment exports to the Soviet Union in the wake of the imposition of martial law in Poland also was ineffective. The European Union did not toe the US line. Sanctions on Iraq also did not work. And the US had to go for an all-out invasion.

Amjed Jaaved
Amjed Jaaved
Mr. Amjed Jaaved has been contributing free-lance for over five decades. His contributions stand published in the leading dailies at home and abroad (Nepal. Bangladesh, et. al.). He is author of seven e-books including Terrorism, Jihad, Nukes and other Issues in Focus (ISBN: 9781301505944). He holds degrees in economics, business administration, and law.