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Western sanctions imposed on Russia aims to isolate Moscow’s economy
(MENAFN) Western sanctions imposed on Russia after its Ukraine offensive aimed to isolate Moscow’s economy, cutting off trade in dual-use goods, industrial products, luxury items, and key exports like oil, coal, and precious metals. financial restrictions have severely limited transactions in US dollars and euros, while logistical hurdles and price caps on energy exports have further complicated trade. However, Russia has countered isolation by strengthening partnerships with friendly nations, and India remains a crucial economic ally.
Despite growing secondary sanctions risks, India has successfully navigated sanctions pressure due to its strong diplomacy, unique trade relationship with Russia, and a cautious business approach. However, these risks are rising, with more Indian firms facing restrictions in 2024.
Sanctions targeting Russian arms sales began before the Ukraine conflict, with the 2017 CAATSA law enabling penalties against buyers of Russian weapons. While China and Türkiye faced sanctions, India—Russia’s largest arms customer—has so far avoided them, thanks to its firm national security stance and Washington’s strategic interest in maintaining good relations amid tensions with China. However, US arms manufacturers may push for sanctions to gain an edge in India’s defense market, though Russia is likely to remain a key supplier for years to come.
In December 2023, former US President Joe Biden signed Executive Order 14114, giving the US Treasury the power to impose financial sanctions on foreign banks conducting transactions linked to Russia’s defense sector and dual-use goods. While Washington has largely avoided sanctioning Indian banks, the threat serves as a pressure tactic, making financial institutions wary of Russian transactions.
To counter these challenges, India could develop a specialized banking network to handle Russian transactions, even if it risks being blacklisted by the US. While trading in local currencies helps, transactions still fall under US sanctions, requiring a long-term strategy for independent financial mechanisms.
Despite mounting pressure, Russia-India trade remains resilient, driven by mutual economic and strategic interests.
Despite growing secondary sanctions risks, India has successfully navigated sanctions pressure due to its strong diplomacy, unique trade relationship with Russia, and a cautious business approach. However, these risks are rising, with more Indian firms facing restrictions in 2024.
Sanctions targeting Russian arms sales began before the Ukraine conflict, with the 2017 CAATSA law enabling penalties against buyers of Russian weapons. While China and Türkiye faced sanctions, India—Russia’s largest arms customer—has so far avoided them, thanks to its firm national security stance and Washington’s strategic interest in maintaining good relations amid tensions with China. However, US arms manufacturers may push for sanctions to gain an edge in India’s defense market, though Russia is likely to remain a key supplier for years to come.
In December 2023, former US President Joe Biden signed Executive Order 14114, giving the US Treasury the power to impose financial sanctions on foreign banks conducting transactions linked to Russia’s defense sector and dual-use goods. While Washington has largely avoided sanctioning Indian banks, the threat serves as a pressure tactic, making financial institutions wary of Russian transactions.
To counter these challenges, India could develop a specialized banking network to handle Russian transactions, even if it risks being blacklisted by the US. While trading in local currencies helps, transactions still fall under US sanctions, requiring a long-term strategy for independent financial mechanisms.
Despite mounting pressure, Russia-India trade remains resilient, driven by mutual economic and strategic interests.
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