Wednesday, April 26, 2023

Sanctions and the India-Russia Arms Trade

 The Russian-Indian diplomatic and strategic relationship has been critical to both countries historically and up to the present day. While questions arose as to the degree of support Russia would receive from India after the Russian invasion of Ukraine began, India has, to date, resisted signing on to Western sanctions, while simultaneously growing business ties with Russia. In fact, the Indian Foreign Minister Jaishankar recently called the relationship the “‘steadiest’ in global relations.” In many ways, India has served as a release-valve for Russia as Western sanctions pile on and force economic rerouting away from the West towards the rest of the world. Yet, even if India has not signed on to the sanctions regime imposed by the West, sanctions nonetheless are having an impact, in this case on the arms trade between Russia and India.

The arms trade between the two countries has a long and consistent history. During the Cold War, the Soviet Union served as nearly the sole-source of Indian arms by the 1960s. While in the post-Cold War era that number has fallen off, Russia still supplies around two-thirds of arms. Nonetheless, arms flow has come to a standstill, as the two countries struggle to find a payment mechanism that will not run afoul of sanctions, while satisfying both sides. As much as $2 billion worth of weapons payments are caught in limbo as a result, with Indian Air Force capabilities the most degraded due to the countries’ inability to agree on a payment mechanism. While Jaishankar has committed to working with Russia to resolve these issues and get the arms trade relationship back on track, it remains to be seen what the long-term impact will be on continued weapons sales to India and whether the void will be filled by other nations, especially if sanctions and currency issues continue to forestall cooperation between the two countries.

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