The Countering America’s Adversaries Through Sanctions Act (CAATSA) is a United States federal law that imposed sanctions on Iran, North Korea, and Russia.
This act prevents trade partners of the United States from entering into bilateral contracts with these three nations.
The US flagged issues of Russia’s alleged interference in the 2016 Presidential elections, and its role in the Syrian war as some of the reasons for punishing engagement with it.
It is a law that came into effect in the US in 2017.
Title II of the Act primarily deals with sanctions on Russian interests such as its oil and gas industry, defense and security sector, and financial institutions, in the backdrop of its military intervention in Ukraine and its alleged meddling in the 2016 US Presidential elections.
Section 231 of the Actempowers the US President to impose at least five of the 12 listed sanctions — enumerated in Section 235 of the Act — on persons engaged in a “significant transaction” with Russian defense and intelligence sectors.
As part of Section 231 of the Act, the US State Department has notified 39 Russian entities (like Rosoboronexport, Sukhoi Aviation, and Russian Aircraft Corporation MiG), dealings with which could make third parties liable to sanctions.
Almaz-Antey Air and Space Defence Corporation JSC, who have made the S-400 system, are in this list.
Sanctions that can Impact India:
There are only two sanctions that may impact either India-Russia relations or India-US relations.
Prohibition of Banking transactions: The first of these, which is likely to have an impact on India-Russia relations, is the “Prohibition of Banking transactions”.
This would mean difficulties for India in making payments in US Dollars to Russia for the purchase of the S-400 systems. It will also affect India’s purchase of spare parts, components, raw materials, and other assistance.
In 2020, Turkey was sanctioned for its purchase of the S-400 system.
Export Sanction: The sanction will have greater consequences for India-US relations.
This is the “export sanction” which has the potential to completely derail the India-US Strategic and Defence partnership, as it will deny the license for, and export of, any items controlled by the US.
The US President was given the authority in 2018 to waive CAATSA sanctions on a case-by-case basis.
Implications for India regarding CAATSA
The India-United States relations, especially when it comes to the defense aspect, have grown exponentially since 2008. At least by 2019, about$15 billion worth of weapons has been purchased by India.
Historically, India also purchased its weapons and the subsequent comments from Russia since the days of the Cold War. Keeping this in mind United States lawmakers had specifically told the senate that the sanctions should not affect major defense partners such as India
A waiver of such CAATSA for India has been under consideration since the law had come into force but little headway has been made in that regard. In fact, India was threatened with sanctions when it decided to buy the S-400 missile launchers from Russia and buy crude oil from Iran. What is also worrying for India is the example of Turkey who, despite being a key NATO ally, was expelled from the US F-35 fighter jet program when it purchased S-400 missile systems from Russia.
Yet India went ahead with the S-400 deal in 2018 with no negative reaction from the United States government. The delivery of the S-400s is expected to finish by 2025.
Lately, the United States Government has stated that although a waiver is not possible at this time, however, in July 2022 the United States (US) House of Representatives has approved an amendment to the National Defence Authorization Act (NDAA), proposing India-specific waiver under the Countering America’s Adversaries Through Sanctions Act (CAATSA).
It will allow India to freely purchase Russia’s S-400 missile system without the fear of American sanctions.
What are the implications of the CAATSA Waiver on India-US Relations?
The NDAA amendment also urged the US to take more steps to assist India’s pivot away from its reliance on Russia-made arms.
The amendment is in sync with the tenor of the recent bilateral strategic relations.
The watershed year was 2008 and since then cumulative US defense contracts with India add up to at least USD 20 billion. It was just USD 500 million in the period prior to 2008.
Furthermore, in 2016, the US recognized India as a major defense partner. Strategic ties have also been strengthened through groupings such as Quad and now I2U2.
For India, a transition away from Russian platforms is in its strategic interests.
Russia’s dependence on China has increased significantly following its invasion of Ukraine, a situation that’s unlikely to change in the future.
Already, China is next only to India as the second largest recipient of Russia’s arms exports.
Given the unraveling of India’s longstanding border management protocols with China, dependence on Russian arms platforms is unwise.
Criticism against CAATSA
Needless to say, the Countering America’s Adversaries Through Sanctions Act has been met with derisions from North Korea, Russia, and Iran.
But the negative feeling has not only been restricted to the United State’s adversaries, but key partners such as the European Union have felt that the CAATSA sheds a negative light on United States-European relations as many of them have gas line projects signed with Russia.
Geopolitical think tanks have argued that the CAATSA will hamper the United States Asian allies in resisting a rising Chinese influence.
Another implication is that this would also discourage other nations from building a defensive relationship with the United States with a view to avoiding any future compromises regarding strategic autonomy.
These experts believe that if the CAATSA is implemented haphazardly, it could eventually backfire on United States policy in the near future.
Russia’s S-400 Missile System
It is a mobile, Surface-to-Air Missile system (SAM) designed by Russia.
It is the most dangerous operationally deployed Modern Long-Range SAM (MLR SAM) in the world, considered much ahead of the US-developed Terminal High Altitude Area Defence system (THAAD).
It integrates multifunction radar, autonomous detection and targeting systems, anti-aircraft missile systems, launchers, and a command and control centre.
It is capable of firing three types of missiles to create a layered defense.
The system can engage all types of aerial targets including aircraft, unmanned aerial vehicles (UAV), and ballistic and cruise missiles within the range of 400km, at an altitude of up to 30km.
The system can track 100 airborne targets and engage six of them simultaneously.
Significance for India:
From India’s point of view, China is also buying the system. In 2015, China signed an agreement with Russia to purchase six battalions of the system. Its delivery began in January 2018.
China’s acquisition of the S-400 system has been viewed as a “game changer” in the region. However, its effectiveness against India is limited.
India’s acquisition is crucial to counter attacks in a two-front war, including even high-end F-35 US fighter aircraft.