India & Russia will use their national currencies for defense deals to bypass US sanctions – report

Moscow and New Delhi have been boosting their arms trade in recent months, with Russia selling submarines, ships, tanks and jets to its Indian partners and set to supply S-400 air defense systems to the country. India’s procurement of S-400s, with a contract worth more than $5 billion, has triggered anger from one of the its largest trade partners, the US, which has warned India of possible consequences of the move.

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The new payment method through the ruble and the rupee, agreed by the central banks of Russia and India, may avoid Washington’s sanctions threat. It would enable India to make the first payment for two warships built by Russia, Bloomberg said, citing sources. It is not clear what vessels were implicated in this, but last year the two parties inked a deal for four Russian guided-missile frigates for the Indian Navy, two of which are being built in Russia’s Kaliningrad region.

India’s multi-billion arms deals with Russia could put it at risk of being sanctioned by Washington using the Countering America’s Adversaries Through Sanctions Act (CAATSA). The law mandates US penalties against entities engaging in significant transactions with Russia’s defense sector companies, such as main official arms exporter Rosoboronexport.

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New Delhi is not the only one willing to purchase Russian arms at the risk of US punitive measures. Washington’s NATO ally Turkey has defied the threat of US sanctions, by going ahead with the purchase of Russia’s S-400 air defense system. Ankara has already received several batches of S-400 components, and the last plane with parts landed in Turkey on Monday.

While the Pentagon has, so far, remained silent on the matter, Turkish President Recep Tayyip Erdogan believes the US will refrain from targeting Ankara with sanctions as President Trump “has the authority to waive or postpone CAATSA.”

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