On September 5, the US Department of State released an official statement regarding sanctions aimed at blocking Russia’s attempt to operationalize the Arctic Liquified Natural Gas (LNG) 2 Project. The statement contained a mention of two India registered firms Gotik Energy Shipping Co (Gotik) and Pilo Energy Cargo Shipping (Pilo Energy) who are now put under sanctions for their attempts at exporting LNG from the Arctic LNG 2 project. In addition, the vessels operated or linked to these two firms were also alleged to engage in ‘deceptive shipping practices’ such as turning off the automatic identification system and using ship- to- ship transfer with the LNG carrier ‘Pioneer’ which was blocked by the US navy on 23 August.
This is not the first time that Indian companies or India-registered firms have faced the ire of US sanctions. On April 2024, three Indian companies−Zen Shipping, Port India Private Limited, and Sea Art Ship Management (OPC)− had to bear the brunt of sanctions for providing their services to the Iran based entity Sahara Thunder− a subsidiary of Iran’s Ministry of Defense and Armed Forces Logistics (Mo DAFL) which plays a key role in the design, development and sale of Unmanned Aerial Vehicles (UAVs). The three Indian companies were alleged to have facilitated the ‘illicit trade’ and ‘transfer of UAVs’ on behalf of the Iranian military to Russia for usage by the latter in its campaigns in Ukraine.
At times, the threat of US sanctions has attempted to play spoilsport at India’s participation in bilateral agreements with countries such as Iran who are viewed as antagonists by Washington. For instance, the May 2024 Agreement between India Ports Global Limited (IPGL) and the Port and Maritime Organisation (PMO) of Iran involving Indian investment in and management of the Shahid Behesti terminal of Chabahar port was followed by a veiled threat from the US Department of State which spoke of the ‘potential risk of sanctions’ for any entity (India) ‘considering business deals with Iran’.
The above instances of actual sanctions or its threat highlight the potential role the latter can play as a roadblock to India’s global ambitions in the long term, if not nearby. This is especially true regarding countries such as Russia and Iran whose relations with US have become strained over the past few years, especially in the theaters of conflict Ukraine and Gaza respectively. From New Delhi’s perspective, partnership with both these countries are essential for its own ambitions in strategic locations such as West Asia, Indian Ocean, and the Arctic.
As outlined in the 22nd Joint Indo- Russian statement released on the eve of PM Modi’s visit to Moscow during July 2024, among the strategic areas identified for cooperation are Transport & Connectivity, Energy, and the Arctic. It is also to be mentioned that India’s Arctic Policy (IAP) rests on six pillars of which two includes Economic and Human Development (energy resources exploration) and Transportation and Connectivity. Given the geographic location of Russia near the Arctic, the overlap between Indo- Russian collaboration and the IAP was bound to be utilized by New Delhi. This synergy and cooperation would also involve the maritime corridors such as the Northern Sea Route (NSR) through the Arctic and the Chennai- Vladivostok Eastern Maritime Corridor.
However, there have emerged reports of Russia using the NSR to ship LNG from its Arctic project in order to bypass US sanctions as well as to transform the above route into a latter day Suez Canal. This, and other activities have come under the eyes of Washington which has resulted in the tightening of its sanctions regime not only against Russia but entities of other nations involved with the above projects as well. This was seen in the listing of Indian companies or the India-registered firms mentioned above.
Similarly, the port of Chabahar in Iran holds an important place in India’s strategic calculus involving its ‘extended neighbourhood’ of West Asia, Central Asia, and the Indian Ocean. Not only does the port provide India access to Central Asian Republics (CARs) and Afghanistan bypassing Pakistan, India’s handling of the port also allows it to act as a conduit between Southeast Asia and Central &West Asia. Moreover, the port is also instrumental to the operationalizing of the 7200 km International North- South Corridor (INSTC) involving India, Iran and Russia.
While no sanctions have been placed on IPGL or any other Indian entity involved with Chabahar so far, but the veiled threat and the hardening of attitudes following the escalations of conflict in Gaza might prove to be detrimental in the long run. The situation might get further compounded with the return of a ‘hawkish’ administration, possibly led by Trump, which might lessen or squeeze the maneuvering space for New Delhi vis-a vis both Russia and Iran.
The sanctioning of the Indian companies as well as the threats of it can be seen as potential limits to the Strategic Autonomy or multi-alignment/ issue based alignment pursued by India in its external domain. This is further compounded by the increasing importance of the US for India, especially in areas such defence trade and cooperation, technological exchange and collaboration in critical and emerging technologies. The overriding rationale behind this Indo- US cooperation has been an aggressive China in India’s doorstep as well as in the theatre of Indo- Pacific. Hence, while pursuing its ambitions with Iran and Russia, New Delhi also cannot afford to alienate or be in the bad books of Washington.
However, at the same time, for Washington India remains an indispensable partner in its increasing rivalry with China in Asia and the Indo- Pacific. This sentiment can also be gleaned from the fact that the announcements listing the sanctioned companies (both Indian as well as India- registered) did not name India explicitly or contain any sort of explicit warning aimed at such activities done under the ‘auspices’ of New Delhi.
Meanwhile, the US should also realize that continued Indian engagement with Iran and Russia are in its own interest as New Delhi’s participation acts as a restraint to Chinese ambitions of fully transforming both Moscow and Tehran into subsidiaries of Beijing. In addition, Indo- Iranian and Indo- Russian cooperation would also act as a deterrent to increasing Chinese influence in areas of strategic importance such as the Straits of Hormuz and the NSR which are crucial for global prosperity. At the same time, the recent expression of Indian willingness to mediate in the Russia- Ukraine conflict and the confidence expressed upon India’s ability by Russian President Putin himself could be utilized by Washington to put an end to a conflagration which has brought the entire West under duress and thereby allow the focus to shift on the real challenge posed by China.
In pursuit of their global ambitions, both India and US need to mindful and appreciative of the tightrope walk tread upon by both while not allowing it to affect the positive momentum of ‘the most defining relationship (Indo- US) of the 21st Century’.
Authored By
Mr. Anuraag Khaund
PhD INTERNATIONAL POLITICS (IP),
SCHOOL OF INTERNATIONAL STUDIES (SIS),
CENTRAL UNIVERSITY OF GUJARAT (CUG)
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