What happens if the United States impose economic sanctions on India in 2018?

 

In 1998, India conducted nuclear tests and the U.S. imposed various sanctions on India. The effects of these sanctions was very limited and did not stop growth in the Indian economy. The current situation is slightly different, as the U.S. is now after India to stop it’s purchases of Iranian Oil and to not buy the S-400 missile defense system from Russia. In both cases, the Indian interests are being negated for interests which are not even in the benefit of region. As Iran has not violated the Nuclear Deal, nor has it sponsored terrorism in India in the past 70 years. This task has been conducted by American Ally Pakistan. A nation which has attacked India in three wars, and been supported by the U.S. in each war, as well as with American foreign aid. A clear double standard is apparent, and much of the U.S. rhetoric is simply aimed at continuing to destabilize the region and slow down Indian growth and influence. If actualities were looked at, Saudi Arabia a nation most responsible for terrorism around the world, is not sanctioned. A similar approach is developing with China, as here once more arbitrary accusations are being made. Many of which do not line up with actual trade policies being made by China. Thus, the strategy is seems to be, to drive up the cost of energy and slow down the Indian economy. On the other hand the policy will increase the price of Chinese products and slow the Chinese economy as well.

Iran once more is being isolated which is not productive for actual change there. As the policy does not seem to be one of empowering change for the better in Iran. This was seen even with Obama’s Presidency, as the only changes which came to the middle east were not successful in the form of the Arab Spring, here secular regimes were replaced with theocratic regimes which later were removed. In many cases dictatorships were returned such as in Egypt. The Trump policy is actually an extension of the policies which began with the invasion of Iraq of 2003, under President Bush. Under President Obama, there were constant observations in the U.S. about how well China had done after joining to W.T.O. As somehow it had not been expected that China would grow to the extent that it did. A similar view was seen about India’s progress. As here once more the use of Indian programmers and technology assets were seen as a growing imbalance in American Trade. Thus, the policies which Trump has launched did not appear only because of his election by the electoral college, not the popular vote just like President George Bush in 2000. Of course, had Hillary Clinton been elected, the actions would not be so overt, and here would have been a diplomatic solution to the question of Chinese trade. It could also be assumed that Iran deal would not have been pulled out of. The the actual implementation of many polices make more of a difference than the actual long term vision behind them.

The fact is that Trumpism, represents implementation of policies which no administration 40 years ago would have done so overtly. From this we can make a case that no hesitation would be shown to sanction India. As it would accomplish the goal of slowing Indian growth. India of course will see it’s growth rate shrink in the short run because of rising energy costs and it’s inability to purchase Iranian Oil at favorable rates. India may well turn to Iraq for oil purchases and begin increased purchases of Basra Light Crude, which is suitable for Indian demand and climate. But the removal of the Iranian Oil Supply, will once more drive the price of oil higher. In effect this is just like having tariffs placed on the Indian Economy. China is also finding itself in a similar predicament. The rising cost of energy is felt harder in fast developing economies. If such an event did happen, India would not collapse in any sense. The effects would be short lived similar to what happened in 1998, and the economy would again resume a growth trajectory. Trade with rest of the world would continue. The U.S. is not India’s largest trading partner. And India’s total trade surplus with the U.S. is only 30 Billion per year. This will not change the dynamics of India’s 2.5 trillion dollar economy. Even American sanctions on Indian Banks and institutions would have little to no effect. Additionally, India produces nearly everything it needs domestically, and imports high tech equipment from China. None of this would change, in fact American companies would be more hurt as they would loose their outsourcing and Research and Development Centers in India. Of course this would help Indian companies to fill the void. At the end, India would simply switch to BRICS institutions for the purchase of oil as well.

Nikki Haley in Delhi, India

The world is a different place than in 1998. It seems that this message is still not accepted by many in Indian politics and by policy makers in the West. As the recent visit by Nikki Haley a person of Indian Origin and former Sikh, who came to deliver more dictate than diplomatic policy to India was not a sign of any real understanding of the realities of India and Asia. Even though she is representing U.S. interests, she is a person of Indian Origin. This is not a fact which is easily overlooked by Indians. She also made no cultural references to India, which even complete foreign dignitaries do on their visits. It seems at the end, the demeaning bullying tactics worked on Prime Minister Modi, as he went against earlier statements and India is now preparing abide by Washington’s orders to eliminate Crude imports from Iran. Of course, this action by India will hurt the Indian economy just as much as sanctions would have. But, India was granted “Permission” to use the Charbahar port to access Afghanistan and trade routers. This “Permission”, was arrogantly labeled as such is an incredible thing in it’s own right. Nations of 1.3 billion souls do not need permission to access their own investments. Especially when the Charbahar port was partially built with Indian money, and what India is doing in Afghanistan is helping to build a unified and democratic nation, which American policies and it’s traditional Ally Pakistan, destabilized and radicalized since the the 1980’s. Though in this case the U.S. may have instilled fear based cooperation from India, the actual effect is very negative as Indians simply can see through this entire episode. The feeling is not one of alliance building but rather of a set of dictates being issued without concern for Indian interests or economic growth. Such diplomacy is not to the benefit of American image nor betterment of relations.