June 26, 2019–Despite a growing economic relationship between the United States and India, high-level meetings today between the nations’ top diplomats reveal strained relations due to a tougher trade environment and differing diplomatic views on U.S. sanctions against Iran and Russia.
Ahead of this week’s G20 meeting in Japan and amid growing tensions with Iran, U.S. Secretary of State Mike Pompeo traveled to India and the Middle East this week to garner support. In India, Pompeo met with Prime Minister Narendra Modi and Minister of External Affairs Subrahmanyam Jaishankar.
While economic relations between the two countries are growing, it appears that geopolitical differences are also rising.
‘Try Harder’ on Trade Relations
Trade between India and the United States on goods and services reached $142 billion last year, with growing Indian imports of U.S. fuel and defense equipment.
The relationship, however, has grown increasingly tougher in the wake of tariffs and counter-tariffs.
It’s impossible to not have trade issues, India’s top diplomat said. The key is to negotiate your way through them. “Both of us are leaving this meeting convinced that we need to tell our governments that, ‘You need to try harder and make sure this happens,'” Jaishankar said, during a joint press conference with Pompeo.
New Tariffs
As of June 1, the U.S. government terminated India’s status as a beneficiary under a program that reduces tariffs on various products. India retaliated June 16 by imposing tariffs of 28 percent on U.S. walnuts and almonds.
Asked if he discussed reverse the U.S. decision, Pompeo made clear he had not. Rather, the two countries would “work through that problem set,” he said.
U.S.-Iran Tensions
Amid mounting tensions between the United States and Iran, Pompeo and other U.S. officials are traveling this week to try to garner support in its disputes against Iran.
While there are some areas of common ground, India’s foreign minister made clear that India has its own interests to pursue.
“As the secretary knows, we have many relationships with many countries, and many of them are of some standing. They have a history,” Jaishankar said. “So, I think we will do what is in our national interest.”
Jaishankar indicated keeping trade open is essential for Indian energy consumers. “India security is part of it, but there are other concerns as well,” he said.
The Price of Oil
India currently has a six-month waiver from U.S. sanctions on Iran, allowing it to import Iranian oil.
As a fast-growing economy with a large appetite for fuel, India imports 85 percent of its energy from other countries. Jaishankar said he wants to keep that trade going, including large imports of oil from the Persian Gulf. Traditionally, India imports about 10 percent of its oil from Iran.
“It is important to us that any global energy supply remain predictable, they remain affordable,” Jaishankar said. He added that Pompeo “suddenly gets what are interests are.”
For his part, Pompeo didn’t back down. “We also know Iran is the world’s largest state-sponsor of terror,” he said. “And we know the Indian people have suffered from terror around the world. So I think there’s a shared understanding of threat and a common purpose to ensure we can keep energy at the right prices and deter the threat.”
But, overall, Pompeo put a positive light on the relations. In a live broadcast following the meetings, Pompeo emphasized the areas of agreement. For example, India has shifted away from purchasing oil from Venezuela. Moreover, U.S. oil exports to India are “surging,” rising to nearly 50 million barrels in 2018, up from 10 million in 2017, according to the U.S. State Department.
India-Russian Relations
Another point of contention in Indo-U.S., or U.S.-Indian, relations is Russia. In particular, India is in the process of buying air missile defense systems, known as S-400, from Russia. India’s diplomats are asking for a waiver from U.S. economic sanctions against Russia for that purchase.
Top Diplomats Talk National Interests
Notes:
The U.S. preferential tariff system which provides lower tariffs on products is called the Generalized System of Preferences, or GSP.
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