“It would be naive to infer any change in China’s efforts to undermine India’s influence across its Indian Ocean neighborhood or moderate its support for Pakistan and terrorist groups like the Jaish-e-Mohammed. But it does indicate that China would not like Doklam-like tensions again. Also, it gives India more space to deal with Trump’s US.”, says the author.

While public attention was focused on the highly publicized 2+2 Dialogue between the Foreign and Defense Ministers of India and the US, two interesting developments took place in India’s relations with China. The first was a remarkably warm meeting that Prime Minister Modi had with the visiting Chinese Defense Minister, General Wei Fenghe, on August 21. The Prime Minister appreciated that differences between the two countries were being handled with “sensitivity and maturity”, which was evident from the prevailing peace along the China-India borders. He also welcomed the growing cooperation between the two countries, including in areas of defense and military exchanges.

Unlike its earlier behavior, which resulted in three million people being stranded and 130 killed in floods in Assam last year, China provided India information on the rising levels of the Brahmaputra, this year well in advance. This enabled India to deal with the flood situation effectively. It would, however, be naïve to infer that these developments signal any change in China’s efforts to undermine India’s influence across its Indian Ocean neighborhood, or moderate its economic, diplomatic and military support for Pakistan and terrorist groups like the Jaish-e-Mohammed. But it does indicate that after the Modi-Xi Jinping summit in Wuhan last year, China would not like tensions like those witnessed in Doklam last year, to arise again, in the near future.

These developments give India more diplomatic space to deal with Trump’s US, which has offended friends and foes alike. The Trump Administration has unilaterally renounced many past American bilateral, regional and global commitments, with its “America First” policies. It is an Administration that has offended and dealt arbitrarily, even with long-term allies like Canada, Germany and Japan. India needs to be totally realistic in dealing with the Trump Administration. Even before commencing discussions with New Delhi, the Trump Administration filed a complaint against India in the World Trade Organization challenging our export programs. Ironically, this move came at a time, when the US had levied heavy duties on India’s exports of steel and aluminum.

The Americans are indicating a desire for an early, face-saving exit, from Afghanistan. The Afghan armed Forces will, hopefully, continue to be armed, equipped and financed to meet challenges posed by the Pakistan-backed Taliban. A far more active engagement by India, with parties that respect the Constitution in Afghanistan, is imperative, so that the Afghans can ensure that Pakistan does not lead the Americans up the garden path, with a promise of good behavior, by the Taliban. Russia and China, for different reasons, now have a cozy relationship with the Taliban. They evidently hope that the Taliban will join them in taking on the Islamic state. Neither the Russians nor the Chinese, however, have a past record of understanding Afghanistan and its people objectively. China will also inevitably face the consequences of brutal suppression of its Muslim population in Xinjiang, bordering Afghanistan.

Military cooperation between India and the US received a boost during the Pompeo-Mattis visit, with the establishment of formal links between India’s Western Naval Command and the American Fifth Fleet, based in Bahrain. Maritime cooperation with this Fleet would be very helpful, in events affecting the safety and security of over six million Indians, living in the Gulf region. Moreover, the Communications and Security Agreement signed during the recent talks would give India access to valuable intelligence information that Americans could provide. The US and India have shared concerns about growing Chinese assertiveness across the Western Pacific and Indian Oceans. These include Beijing seeking the establishment of a “string of pearls” across sea-lanes, from Kyaukpyu in Myanmar, to Djibouti. India, the US and Japan have been carrying out tripartite naval exercises. These exercises should now be extended across India’s west coast.

Recent US legislation, popularly alluded to as CAATSA, enables it to impose sanctions on countries, which have “significant transactions” with Russian arms industries. These would adversely affect all banks having dollar transactions, which virtually all major Indian banks have. After strong lobbying by India, the Trump Administration got the legislation amended to enable it to exempt countries like India, Indonesia and Vietnam from its provisions. India has also been affected by recent sanctions imposed by the Trump Administration on oil purchases from Iran, a major supplier, after the Obama Administration revoked UN sanctions. With the reintroduction of sanctions on Iran by the Trump Administration, New Delhi would have to get a sanctions waiver from President Trump, for oil imports from Iran, after November.

China escapes the effect of these sanctions, because it has a largely balanced trade with Iran and Russia and no dollar transfers are required. India has trade deficits and cannot arrange payments through bilateral settlement mechanisms, with either Russia or Iran. These are the two most crucial issues, affecting India-US relations presently. But what is interesting is that not a word was uttered officially about these crucial issues, by either side, after the recent 2+2 Dialogue. The American move, imposing sanctions on purchase of Russian arms, are obviously as motivated by a desire to promote its own arms sales, as by geopolitical considerations, to pressurize Russia. India will lose face internationally if it backs off from getting crucial S400 air defense missiles from Russia, for which negotiations have been completed.

India could consider devising measures to modify its arms relationship with Russia, to one linked to its “Make in India” program. Payments will, of course, be made easier, if the Russians import more from India, by resorting to rupee trade, like the Soviet Union did. While US sanctions are not likely to be applied for India’s Chabahar port project in Iran, New Delhi will inevitably have to progressively reduce oil imports from Iran, after persuading the US not to oppose dollar payments, for a specified time, beyond November.

In a long-term perspective, international cooperation has to be sought, if the US is to be prevented from acting in an arbitrary manner. Even its allies like Germany, which could face US sanctions for gas imports from Russia, may not be averse to considering such actions, to end the dominance of the US dollar, in international transactions.

(The author is a former Indian diplomat.)