Sanctions-hit Russia Seeks Aircraft, Automotive, Train Parts And U.S. Dollars From India And Turkey

SOCHI, RUSSIA - MAY 21, 2018: India's Prime Minister Narendra Modi (L) and Russia's President Vladimir Putin shake hands during a meeting. Mikhail Metzel/TASS (Photo by Mikhail Metzel\TASS via Getty Images)

Russia will be looking for aircraft part supply opportunities in Turkey, India and other countries, head of the Continuous Airworthiness Management Department at the Federal Air Transport Service (Rosaviatsiya) Valery Kudinov said at the MRO Russia & CIS conference.

China had refused to make such deliveries to Russian airlines, he said.

“We have tasked airlines with looking for a possible supplier of parts on their own. As far as I know, there is information that a request has been made to China, but China has refused to do it,” Kudinov said.

“We will be looking [for opportunities] in other countries. Perhaps, via our partners, Turks, or via India. Every company will reach an agreement on its own, while we [Rosaviatsiya] will merely help legalize these parts,” he said.

In the meantime, the Rosaviatsiya press service said “Valery Kudinov in accordance with his work obligations is not authorized to make official statements” on behalf of the agency.”

As reported earlier, sanctions imposed by the European Union on February 26 prohibit the delivery of civil aircraft and aircraft parts to Russia, as well as technical maintenance and insurance of such aircraft. Lessors are compelled to terminate current contracts with airlines by the end of March.

Most aircraft operated by Russian airlines are made abroad, primarily by Boeing and Airbus. Nearly all aircraft are registered in foreign jurisdictions, mostly in Bermuda. According to the Cirium consulting company, over half of aircraft are leased by foreign owners.

India withhold arms procurement payments

Facing a series of crippling economic sanctions after its military offensive against Ukraine, Russia has written to the Indian defence ministry, requesting clearance of payments worth $1.3 billion that have been halted since last month.

In the letter, the Russian Federal Service for Military-Technical Cooperation has sought meetings with senior functionaries to resolve the issue, pointing out that payments for several large defence deals have not been processed.

The letter was received on March 14 but officials are finding it difficult to process any payment to Russia as most of its banks have been put on the sanctions list, which has resulted in all Indian banks refusing to conduct transactions for fear of being excluded from the global financial system.

Even entities such as UCO Bank, which were being used in the past to transfer money to Russia for defence deals that were under scrutiny, have refused to process any transaction in the absence of clear directives, said people aware of the matter.

Payments for several ongoing contracts for missile systems, warships and components for aerospace and land systems have been stuck since last month, when financial sanctions were announced against Russian entities.

Officials said the issue has become complex after the two Russian banks (VTB and Sberbank) undertaking transactions for defence contracts came under sanctions. In the case of Sberbank, which processed billions of dollars worth of arms deal money annually, the US treasury has even sanctioned its chief executive Herman Gref.

The problem is twofold, according to those in the know. At one end, Indian banks are unwilling to transfer money to local branches of the Russian bank and, at the other, Russian banks are unable to convert the Indian rupees for remittance in roubles to Moscow.


In the past, the Euro route was used to transfer rupees to roubles but with this route now closed, Russian banks are exploring several other possibilities, including an option of tapping into the Chinese banking system. Russian banks have had at least two in-depth meetings with ICBC and Bank of China in Mumbai to see if transactions can be done using Chinese currency, said people in the know.

Russian banks used Indian banks such as Punjab National Bank, Union Bank, IndusInd Bank, Axis Bank and Bank of India to convert rupees into roubles for defence related payments in the past. With this mechanism no longer viable, new modes of payments are being sought

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