U.S. Deputy NSA cautions India against trade deals with Russia

Daleep Singh warns India of ‘consequences’. 

Updated - April 01, 2022 10:13 am IST

Published - March 31, 2022 06:39 pm IST - NEW DELHI

Foreign Secretary Harsh Shringla with U.S. Deputy NSA Daleep Singh at a meeting in New Delhi on March 31, 2022. 

Foreign Secretary Harsh Shringla with U.S. Deputy NSA Daleep Singh at a meeting in New Delhi on March 31, 2022.  | Photo Credit: Twitter/@MEAIndia

There will be “consequences” for any country, including India, that conducts local currency transactions through Russia’s central bank or constructs a payment mechanism that subverts or circumvents the United States’ sanctions against Russia, American Deputy National Security Adviser for International Economics Daleep Singh said in New Delhi on Thursday, hours before Russian Foreign Minister Sergey Lavrov landed. Mr. Lavrov is due to meet Prime Minister Narendra Modi and External Affairs Minister S. Jaishankar on Friday, and is expected to brief them on the war in Ukraine, peace talks, keeping defence supplies running and alternate payment mechanisms in the face of Western sanctions.

In a first for the U.S. administration, Mr. Singh also publicly stated that India must not expect that Russia, as a “junior partner” of China, would assist India if there were more incursions along the Line of Actual Control.

“I come here in a spirit of friendship to explain the mechanisms of our sanctions, the importance of joining us, to express a shared resolve and to advance shared interests. And yes, there are consequences to countries that actively attempt to circumvent or backfill the sanctions,” Mr. Singh told journalists between his official meetings.

“We are very keen for all countries, especially our allies and partners, not to create mechanisms that prop up the [Russian] rouble, and those that attempt to undermine the dollar based financial system,” he stated in reply to a question from The Hindu.

Bank of Russia, RBI officials meeting

This week, officials of the Bank of Russia, the country’s central bank, met Reserve Bank of India officials to discuss alternative payment mechanisms and routing through banks that are immune to international sanctions, and External Affairs Minister S. Jaishankar told Parliament that a special inter-ministerial group led by the Finance Ministry had been tasked with resolving the payment issues for import and export with Russia caused by the sanctions.

When asked how India’s ties with Russia could affect its partnership with the U.S. in the Quad, Mr. Singh said there was a “shared recognition in the Quad that China is a strategic threat to a free open and secure Indo-Pacific.”

 “Russia is going to be the junior partner in this relationship with China. And the more leverage that China gains over Russia, the less favourable that is for India, I don’t think anyone would believe that if China once again breached the Line of Actual Control, that Russia will come running to India’s defence.” He observed.

Mr. Singh declined to comment on what the “consequences” he referred to were, and whether the U.S. would consider India’s purchase of the S-400 missile system from Russia, which has used a “rupee-rouble” alternate payment mechanism thus far, as eligible for the new sanctions as well as previous sanctions under the CAATSA (Countering America’s Adversaries Through Sanctions Act). He would rather keep those discussions with the government “private”, he added.

European officials visits

While Mr. Singh’s message was put more plainly, his words mirror comments by European Union and German officials in Delhi this week, who said that India must not take “economic advantage” of western sanctions, nor seek to dilute them during the war. U.K. Foreign Minister Liz Truss also arrived in India with a similar message on Thursday.

The British High commission said her visit was “part of a wider diplomatic push following Russia’s illegal invasion of Ukraine”, and she would underline the “importance of democracies working closer together to deter aggressors, reduce vulnerability to coercion and strengthen global security.”

 Mr. Singh said the U.S. “stands ready” to help India diversify its energy and defence hardware requirements if it chose to reduce its “dependence” on Russia, nor did India’s intake of Russian oil at present violate the U.S.’s sanctions. “What we would not like to see is a rapid acceleration of India’s imports from Russia as it relates to energy or any other any other exports that are currently being prohibited by us or by other aspects of the international sanctions regime,” he noted.

According to news agency Reuters, Indian oil refiners have bought more than 13 million barrels of Russian oil since the Ukraine war began on February 24, a steep rise from last year, when India bought 16 million barrels of Russian oil in all of 2021.

‘Five-channel’ approach

Mr. Singh, who is the chief strategist on sanctions against Russia in the Biden administration, said he had spelt out the U.S.’s “five-channel” approach to dealing with Russia over its war in Ukraine, during what he called an “honest dialogue” with officials in the government.

The channels include a “financial shock” to Russia’s largest banks and its central bank- cutting off technology transfers to Russia, ejecting it from the International world order (including revoking the most favoured nation) status, ending borrowing privileges at the IMF (International Monetary Fund) and the World Bank, sanctioning rich individuals close to the Putin government and downgrading Russia’s status as a leading energy supplier

Over two days in Delhi, Mr. Singh met his counterpart Deputy NSA Vikram Misri , Commerce and Industries Minister Piyush Goyal, Foreign Secretary Harsh Shringla and officials in the Prime Minister’s Office and the Finance Ministry.  

“What we are doing is pushing Russia back decades. I think they’re going back to the USSR [Soviet Union], in terms of their technological sophistication, that reduces Mr. Putin’s ability to exert influence and to exercise power on the world stage.” Mr. Singh stressed. His discussions in Delhi were “very similar to the discussions we’ve had with our close friends and partners in Europe, and in Asia,” he pointed out.

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