Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2018 Fourth-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis on key developments in the coming quarter.
As China assumes the mantle of most powerful nation in the Eastern Hemisphere, its neighboring rival, India, is turning to the United States for help. New Delhi and Washington are strengthening their defense partnership as part of a broader effort to maintain the balance of power against China, both on the Eurasian landmass and in the Indo-Pacific. After two false starts, their 2+2 dialogue meeting on Sept. 6 — featuring U.S. Secretary of State Mike Pompeo and Secretary of Defense James Mattis and their Indian counterparts, Sushma Swaraj and Nirmala Sitharaman — offered a high-level format for both countries to discuss the challenges and opportunities in the relationship.
India's insistence on maximizing its strategic autonomy means the relationship will not evolve as swiftly as the United States would like. But New Delhi's need to compensate for its military imbalance against China means that India will bolster the partnership nevertheless, implying that points of bilateral friction alone, such as India's reliance on Iranian oil and Russian arms, will not alter the structure of relations, even if they impact the pace.
The rise of a militarily assertive China is the most consequential geopolitical development in Eurasia. For neighboring India, which shares a disputed border with its giant northern rival along the Himalayas, China's emergence necessitates a stronger defense partnership with the United States, even as New Delhi aims to reset relations to better manage tensions with Beijing. China’s continued expansion will force India to explore deeper cooperation with Washington.
Inking a Defense Pact
During the 2+2 meeting, India fulfilled a longstanding U.S. wish by signing the Communications Compatibility and Security Agreement (COMCASA). One of three foundational American defense agreements, COMCASA details the legal framework surrounding the transfer of sensitive U.S. technology. The agreement duly enables encrypted communications between the countries' militaries on American-made systems, which include the Sea Guardian drone, the M777 ultralight howitzer and the Apache AH-64E attack helicopter. COMCASA aims to promote interoperability between the two militaries, but India's heavy reliance on Russian weapons systems challenges that aspiration.
India's long hesitance in signing the agreement stemmed from its desire to preserve maximum room for its independence in action and thought — in addition to its worries that the United States could share Indian intelligence with Pakistan. This posture, known as the doctrine of strategic autonomy, is a defining feature of India's foreign policy. But if the trend toward India's alignment with the United States continues in the long run, policymakers in New Delhi will eventually be forced to embark upon an internal reassessment of India's adherence to strategic autonomy, possibly leading to a fundamental shift in the country's foreign policy.
India's long hesitance in signing the COMCASA agreement stemmed from its desire to preserve maximum room for its independence in action and thought — in addition to its worries that the United States could share Indian intelligence with Pakistan.
Tiptoeing on Iran
India's reliance on Iranian oil is a major sticking point in the U.S.-India relationship. After China, India is Iran's biggest customer, with Indian state-owned refiners importing 770,000 barrels of crude per day in July alone. However, as the administration of U.S. President Donald Trump seeks to curb Iran's ballistic missile program and support for regional proxies, including Hezbollah in Lebanon and Houthi rebels in Yemen, its policy of imposing oil-related sanctions to alter Tehran's behavior is posing a challenge for India, the world's third-largest consumer of oil. In an effort to earn a rare U.S. sanctions waiver by the Nov. 4 deadline, India is considering cutting its Iranian oil imports by 50 percent. India, however, may have found a way to sidestep the sanctions in the meantime, as it will permit state-owned refiners, such as the Indian Oil Corp. and Bharat Petroleum Corp., to import oil transported by Iranian tankers backed by Iranian insurance.
India's interest in Iran is also a function of the Indo-Pakistani rivalry. Because it lacks a direct trade route across Pakistan to Afghanistan, an important regional ally, India is developing Iran's Chabahar port on the Arabian Sea so it can circumvent its bitter northwestern rival, establish a trade corridor with landlocked Afghanistan and ultimately access the untapped markets of Central Asia. Although the United States is pushing countries everywhere to cease their trade relations with Iran, Washington is likely to allow this element of Indo-Iranian cooperation to continue, as it will be beneficial to the U.S.-backed administration of Afghan President Ashraf Ghani as he strives to grow the country's $20 billion economy amid the ruins of war.
India Faces CAATSA's Ramifications
But even if India and the United States have grown closer with the signing of COMCASA, the former's dependence on Russian arms imports continues to present a bone of contention between New Delhi and Washington. Incensed by what it views as Russian meddling around the world — and worried by Trump's conciliatory tone toward Russian President Vladimir Putin — the U.S. Congress passed the Countering America's Adversaries Through Sanctions Act (CAATSA) in August 2017 to target Moscow's defense and energy industries. Under Section 231 of the act, the United States has threatened to impose secondary sanctions against countries engaging in significant transactions with Russia — while earning more business for American defense manufacturers in the process.
This poses a problem for India, the world's largest importer of arms and Russia's biggest customer. The two countries are finalizing a $6 billion contract for the Russian-made S-400 air defense missile system in time for Putin's visit to India in October. Because India's overreliance on arms imports is a vulnerability, New Delhi will intensify its efforts to encourage technology transfers from Russia and other arms suppliers, such as Israel and France, to support indigenous production and create manufacturing jobs under Prime Minister Narendra Modi's "Make in India" initiative. At the same time, India will also pursue diversification through the purchase of U.S. weapons systems, something COMCASA will encourage.
At long last — as far as U.S. military officials are concerned — India has agreed to sign one of the United States' foundational defense agreements, COMCASA. But eager as Washington is to pull New Delhi ever further into its orbit, India's desire to maintain its strategic autonomy means it will not prioritize the United States to the detriment of others — suggesting that closer relations with the United States won't necessarily be problem-free relations.