VIF Digest – USA and Russia (Vol 2 Issue V)

April 1 - 30, 2018

Contents

Comey’s book Ruffles Trump;

The Mueller Investigation;

What kind of Secretary of State will Mike Pompeo be?;

Bolton assumes Office;

US adds India to Currency Watch List with China over questionable Foreign Exchange Policies;

US may revoke Special Tariff if India continues Pricing Control on Medical Device;

India-US Negotiations on possible Tariff Exemptions;

Trump team outlines steps to implement Indo-Pacific Strategy;

India could acquire Killer Drones after Donald Trump changes US Policy;

USAF Awards $1 Billion Contract for a Hypersonic Cruise Missile - India as a MTCR Member, can opt for Co-Development with US;

India, US discuss need to resume dialogue on Economic And Financial Partnership;

Lockheed to Sweeten India Fighter Jet Bid With F-35 Technology;

Russia and China to merge Satellite Tracking Systems into one Global Navigation Giant;

Moscow ready for US Court Battle over Russian Diplomatic Property;

Moscow, Washington may start gearing up for Putin-Trump Summit soon;

Putin, Macron speak in favor of continuing Efforts to implement JCPOA;

Russia expects to implement Agreements on Cooperation with Japan in near future, says Deputy Foreign Minister.

USA

Comey’s book Ruffles Trump

The release of former FBI director James Comey's book, A Higher Loyalty: Truth, Lies and Leadership, and the accompanying press tour has dominated the US president’s attention for nearly a week despite allied air strikes on Syria and continued attention on the raid of Trump attorney Michael Cohen. Comey has been deeply critical of Trump, characterising him as morally unfit to occupy his office in both the book and media interviews. Trump has labeled Comey as a "slime ball", a liar and leaker, suggesting he be “sent to jail” and tweeting about him a dozen times in the past week, including just hours before announcing military action against the Syrian regime.

Trump administration officials meanwhile have painted Comey as a disgruntled ex-employee looking to settle scores, with press secretary Sarah Huckabee Sanders last week stating that his firing was “one of the president's greatest achievements”. [Back to Contents ]

The Mueller Investigation

For almost a year, US President Donald Trump has remained uncharacteristically quiet on special counsel Robert Mueller - the man overseeing the investigation into Russian interference during the 2016 election campaign. But that has changed dramatically in recent weeks. In mid-April, the White House went as far to say “the president has the power to fire Mr Mueller, if he so wished.” "The Mueller probe should never have been started ... WITCH HUNT!" the US President tweeted. The situation escalated further when FBI agents raided the offices of Mr Trump's longtime personal lawyer Michael Cohen at Mr Mueller's request in connection with the investigation.

Railing against what he described as "an attack on our country," Mr Trump said "many people" were now advising him to fire Mr Mueller. He took to twitter again to call the investigation "A TOTAL WITCH HUNT!!!" [Back to Contents ]

What kind of Secretary of State will Mike Pompeo be?

Mike Pompeo was confirmed as the new US secretary of state replacing the outgoing Rex Tillerson in Donald Trump’s administration. The Senate Foreign Relations Committee approved the confirmation of the former CIA director after Republican Senator Rand Paul “bowed to pressure from President Trump and dropped his opposition”, says Politico’s Jake Sherman. “After calling continuously for weeks for Director Pompeo to support President Trump’s belief that the Iraq War was a mistake, and that it is time to leave Afghanistan, today I received confirmation that Director Pompeo agrees with President Trump,” said Rand Paul.

The senator’s last-minute reversal tilted the balance in Pompeo’s favour. Although “nine Democrats opposed Pompeo’s nomination, eleven Republicans voted in favour, paving the way for his speedy confirmation.” [Back to Contents ]

Bolton assumes Office

John Bolton, the pugnacious former U.N. ambassador took over as President Donald Trump’s national security adviser — the third person to hold the job in barely 14 months. Trump’s selection of Bolton last month set off a guessing game in Washington as to just how much of an imprint his “take-no-prisoners approach to foreign policy” will have on Trump’s team, already beleaguered and exhausted after a tumultuous first year. Apprehension outside the White House about Bolton’s influence has been matched by hand-wringing in the West Wing about whose fortunes will rise and fall in the Bolton era. In Trump’s White House, it’s become a truism that when a powerful aide departs — like the chief of staff, national security adviser or a Cabinet secretary — others who were considered aligned with that aide are often the next to go. There have been many such shake-ups, even in just the past few weeks. And Bolton, in his former jobs at the U.N. and at the State Department, developed a reputation as someone who doesn’t suffer fools quietly. [Back to Contents ]

US adds India to Currency Watch List with China over questionable Foreign Exchange Policies

In escalating tensions over trade issues, the US Treasury has added India to its watch list of countries with potentially questionable foreign exchange policies, joining China and four others. The US Treasury said the "monitoring list" includes those "major trading partners that merit close attention to their currency practices." In addition to India, the semi-annual report to Congress names five countries that continue on the list from October: China, Germany, Japan, Korea and Switzerland.

Countries remain on the list for two report cycles "to help ensure that any improvement in performance versus the criteria is durable and is not due to temporary factors." While no major trading partner was found to be manipulating its currency, five of those on the list meet two of the three criteria, while China is included because "it constitutes a disproportionate share of the overall US trade deficit." The US has a deficit of USD 337 billion with China of a total global trade deficit of USD 566 billion, according to government data. [Back to Contents ]

US may revoke Special Tariff if India continues Pricing Control on Medical Device

The US Trade Representative (USTR) is considering to revoke special tariff provided to India if it continues with its pricing policy on medical devices manufactured by American companies, The USTR representatives, who visited India on April 9, met Indian authorities on this issue with the message that India will lose the Generalised System of Preference (GSP) if it continues with “drastic” pricing measures on medical devices. GSP is a preferential treatment that the US government gives to its exporters from developing and developed countries. The benefits under the GSP include duty-free entry of certain goods like chemicals, gems, textiles among others.

In 2017 India was the biggest beneficiary of GSP with subsidies worth $5.6 billion. USTR’s position changed just a week after the Trump administration renewed the GSP agreement with India. “US lobby groups had asked the Trump administration to renew the GSP so that they can use this as a bargaining tool with India to deter it from imposing price cuts on medical devices,” said an official from one of the US lobby groups. [Back to Contents ]

India-US Negotiations on possible Tariff Exemptions

India hopes to convince the US to exempt it from steel and aluminium duty hikes at a bilateral meeting during a visit by assistant US trade representative (USTR) Mark Limscott to New Delhi. The 10 April meeting in preparation of a Trade Policy Forum dialogue at the end of the year was the first opportunity for the Indian side to put across its case for an exemption along the lines of the ones the US has granted to the European Union, Argentina, Australia, Brazil, Canada, Mexico and South Korea.

A commerce ministry official, speaking on condition of anonymity, said the US move to impose tariffs on the grounds of national security and then grant exemptions to its key allies is against World Trade Organization rules. “But we cannot retaliate against the US like China, since the US is a valuable strategic partner. We will try to convince them as our business is getting hurt,” the official added. China on Monday increased tariffs by up to 25% on 128 US products, from frozen pork and wine to certain fruits and nuts, escalating a trade dispute between the world’s biggest economies in response to US duties on imports of aluminium and steel. [Back to Contents ]

Trump team outlines steps to implement Indo-Pacific Strategy

At a time of churn in US President Donald Trump’s foreign policy team, the state department has outlined steps to implement its ambitious Indo-Pacific strategy, first sketched out by former secretary of state Rex Tillerson. According to Alex Wong, deputy assistant secretary of state for East Asian and Pacific Affairs, “free and open” are the two strategic modifiers used to describe this strategy.

The usage of the term “Indo-Pacific” by the Trump administration as against “Asia-Pacific” used previously, “acknowledges the historical reality and the current day reality that South Asia and in particular, India, plays a key role in the Pacific, in East Asia and South-East Asia,” the US official said. The “free and open Indo-Pacific strategy is not just about China,” Wong said, adding: “This is for the very simple reason that the region is much larger than China. In the ASEAN states alone, we have 600 million people. In India, we have 1.2 billion people.”

Analysts in India said the fact that it was an official of the rank of deputy assistant secretary of state who defined key terms of the strategy did not inspire confidence. But the policy itself stayed within the framework of what was defined earlier, which is something to be welcomed. [Back to Contents ]

India Could Acquire Killer Drones after Donald Trump Changes US Policy

India may finally be able to acquire armed drones from the United States that could transform the capabilities of the armed forces not just in strike operations against China and Pakistan over land and sea but also in operations against terrorists.
This comes after the Trump administration came up with a new policy on export of unmanned aerial systems that allows the use of drones to fulfill “counter-terrorism objectives". The policy comes just a day after US President Donald Trump promised to short-circuit the long-winded process to sell the drones to its allies. For India, it opens up the possibility of the use of drones in operations against terrorist launch-pads along the Line of Control if the Centre were to go ahead with the purchase. The policy does, however, require safeguards to ensure that partner nations who acquire US drones do not "conduct unlawful surveillance or use unlawful force against their domestic populations". It also says these can be used in operations only when "there is a lawful basis for resorting to the use of force under international law, such as national self-defence". [Back to Contents ]

Sales of these drones can now be made through Direct Commercial Sales from companies such as the US firm General Atomics, which has already been in talks with the Indian Navy for sale of 22 Predator B 'Sea Guardian' drones for maritime reconnaissance operations over the Indian Ocean. While India was so far looking at unarmed versions of the Sea Guardian in a deal estimated to be worth approximately $2 billion, the new policy makes it possible for New Delhi to acquire variants for the Air Force and Army with weaponry including the AGM-114 Hellfire missile which has been used by US forces for precision strikes and targeted killings of high-profile terrorist targets in Afghanistan and Pakistan. [Back to Contents ]

USAF Awards $1 Billion Contract for a Hypersonic Cruise Missile - India as a MTCR Member, can opt for Co-Development with US

The U.S. Air Force has selected Lockheed Martin to design and prototype a new hypersonic cruise missile, as part of a broad Pentagon push to kick start America’s hypersonic arsenal. The indefinite-delivery/indefinite-quantity contract for the “design, development, engineering, systems integration, test, logistics planning, and aircraft integration support of all the elements of a hypersonic, conventional, air-launched, stand-off weapon” was announced by the service April 18. The total value for Lockheed could be as high as $928 million over the course of the program’s unspecified timeline. The program is known formally as the Hypersonic Conventional Strike Weapon.

“This effort is one of two hypersonic weapon prototyping efforts being pursued by the Air Force to accelerate hypersonics research and development,” service spokeswoman Ann Stefanek said in a statement. “The Air Force is using prototyping to explore the art-of-the-possible and to advance these technologies to a capability as quickly as possible.” [Back to Contents ]

India, US Discuss need to Resume Dialogue on Economic and Financial Partnership

Officials from India and the US have discussed the need to restart Economic and Financial Partnership dialogue for greater cooperation and coordination on issues of common concern especially in the multilateral fora. The discussion took place in New Delhi between Economic Affairs Secretary Subhash Garg and US Under Secretary of Treasury for International Affairs David Malpass. "The discussion centered on the need to restart the dialogue under the Economic and Financial Partnership and for greater cooperation and coordination on issues of common concern especially in the multilateral fora," a media release said. Garg is currently on an official tour here to attend the Spring Meetings of the International Monetary Fund (IMF) and the World Bank. [Back to Contents ]

Lockheed to Sweeten India Fighter Jet Bid with F-35 Technology

Lockheed Martin Corporation will provide latest combat jet technologies including a target tracking device aboard the F-16 aircraft that it plans to offer to India in its bid for the world’s largest order from the Indian Air Force. The global defense giant will apparently offer jets equipped with the advanced radar which is fitted on its fifth-generation combat jet, the F-35, as well as a helmet-mounted tracking system and a new radio data link system, Vivek Lall, vice president for strategy and business development at Lockheed Martin said Wednesday.

The bid also comes with an offer to shift its lone production line for F-16s from Fort Worth, Texas in the U.S. to India as it takes on competitors SAAB AB and Boeing Co. The variant being pitched is the F-16 Block 70. “There are a lot of technologies that come into the F-16 from F-35 and F-22, including the latest radar on these platforms,” Lall said in an interview. “It is a contemporary, state-of-the-art platform.” Lockheed Martin sees a huge export potential to provide over 200 F-16s to the global market if India chooses the aircraft, Lall said. The winner of the combat jet tender will be required to establish a production line within three years. [Back to Contents ]

Russia

Russia and China to merge Satellite Tracking Systems into one Global Navigation Giant

According to reports, Moscow and Beijing will team up to create an integrated navigation system based on Russia’s Global Navigation Satellite System (GLONASS) and the Chinese BeiDou. The system will cover most of Eurasia. The countries will reportedly negotiate the merger in May at the International Conference on Advanced Technologies in Manufacturing and Materials Engineering in the Chinese city of Harbin.

The initiative to merge the two separate systems is the result of a proposal made by the Chinese authorities to the Russian Federal Space Agency, Roscosmos. It is intended to create a joint global navigation satellite system, covering the countries of the Shanghai Cooperation Organization, which include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India and Pakistan. The new system will allow the partners to share data on the positions of navigation satellite groups, improve working efficiency in a real-time environment, and to exchange corrections, where necessary. At the same time, Russian GLONASS may significantly broaden its user base. [Back to Contents ]

Moscow ready for US Court Battle over Russian Diplomatic Property

Russia plans to file a lawsuit with a US court for the return of its diplomatic property in the United States. Moscow has already hired American lawyers to defend its interests, according to a high-ranking source in Russian diplomatic circles. According to the source, launching a lawsuit amid the current diplomatic conflict with a number of Western countries is an opportunity for the American justice system to "prove its independence and political impartiality." Former Russian Ambassador to the United States Sergey Kislyak and Deputy Foreign Minister Sergei Ryabkov told Izvestia that Moscow is not going to back down and will fight to the very end.

"Russia has exhausted all diplomatic and political avenues to return its diplomatic property to the United States, in which it’s seizure set off the conflict at the end of Barack Obama’s presidential term," the newspaper wrote. According to Izvestia's source in Russian diplomatic circles, it would be quite symbolic if an American court sided with Russia's in the property case in this all-out legal battle. [Back to Contents ]

Moscow, Washington may start gearing up for Putin-Trump Summit soon

Quoting a source from the US State Department, the Kommersant reported that the US and Russian diplomatic institutions may start preparing for a meeting between the two presidents - Donald Trump and Vladimir Putin. A source close to the Kremlin acknowledged that amid the current standoff it won’t be an easy task to convene a full-fledged bilateral summit, but did not rule out that the two leaders will meet only in late 2018 on the side lines of the G20 summit in Argentina.

Trump suggested holding a meeting with Putin during their last phone conversation on March 20. A source close to the Kremlin noted that the US leader hinted that he would be ready to pay a visit to Moscow if Putin visited the US capital first. White House Press Secretary Sarah Sanders told reporters that the US leader was planning to meet with Putin despite the new round of harsh sanctions imposed on Russia, which blacklisted 38 Russian businessmen and officials along with major companies.

Putin and Trump have not held a full-fledged bilateral summit so far. In July 2017, they had a two-hour-long meeting on the side lines of the G20 summit in Hamburg, and in November they briefly met at the Asia-Pacific Economic Cooperation (APEC) summit in Da Nang. According to a source close to the Kremlin, given the current climate, which has become more tense over the past months, it will be difficult to arrange a bilateral meeting between the two presidents in the US, Russia or a third country.

Paul Saunders, Executive Director of the Washington-based Center for the National Interest, doubts that the meeting between the two presidents will be held in the coming months. [Back to Contents ]

Putin, Macron speak in favor of continuing efforts to Implement JCPOA

Presidents Vladimir Putin of Russia and Emmanuel Macron of France have spoken in favor of "continuing efforts to implement the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program, which is a major factor of international stability," the Kremlin press service said on Monday after a telephone conversation between the two leaders.

The JCPOA, known as the deal on Iran’s nuclear program, was signed between Iran and six international mediators (the United Kingdom, Germany, China, Russia, the United States, and France) on July 14, 2015. On January 16, 2016, the parties to the deal announced beginning of its implementation. Under the deal, Iran undertakes to curb its nuclear activities and place them under total control of the International Atomic Energy Agency (IAEA) in exchange of abandonment of the sanctions imposed previously by the United Nations Security Council, the European Union and the United States over its nuclear program.

In January 2018, US President Donald Trump said his country would withdraw from the JCPOA if changes were not brought into it. In his words, he was "waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal." [Back to Contents ]

Russia expects to Implement Agreements on Cooperation with Japan in near future, says Deputy Foreign Minister

Russia expects to soon implement documents on cooperation with Japan in the trade and economic sphere, Russian Deputy Foreign Minister Igor Morgulov said in his speech at the fourth Russian - Japanese forum dubbed "The Points of Convergence." He noted that trade-investment cooperation is an important component of Russian-Japanese ties and that its potential has not been used in full. "There is still discussion of cooperation plans based on the Russian list of priority investment projects and on the plan consisting of eight items suggested by [Japanese] Prime Minister [Shinzo] Abe," Morgulov said. "The involved governmental agencies have already signed about 100 various specific documents, and we hope to make them operational soon," the Russian deputy foreign minister stressed.

The dialogue between Moscow and Tokyo received a boost at various levels. The development of economic cooperation is based on a plan consisting of eight items which Abe proposed in May 2017. The document stipulates the consolidation of relations between the two countries in the energy industry, small and medium businesses, the Far East’s industrialization and in the export base extension. It also includes a proposal to step up cooperation in advanced technologies, including the nuclear industry, and in the sphere of humanitarian exchanges. [Back to Contents ]

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