The debate in the U.S. hovers around the efficacy of CAATSA-related sanctions against India

The Chief of the Air Staff, Air Chief Marshal V.R. Chaudhari, recently said that the delivery of the S-400 Triumf air defence systems from Russia is expected according to schedule. In response, U.S. Deputy Secretary of State Wendy Sherman hoped that both the U.S. and India could resolve the issue. The “issue” here is that receiving the missile systems could attract for India sanctions under the Countering America’s Adversaries through Sanctions Act (CAATSA), enacted by the U.S. Congress. Ms. Sherman emphasised that the U.S. thinks it’s “dangerous” for “any country that decides to use the S-400”. India is scheduled to receive five squadrons of the surface-to-air missile systems under the $5.43 billion (₹40,000 crore) agreement it signed three years ago.

Enactment of CAATSA

Even though CAATSA was signed into law by then President Donald Trump in 2017, India stuck to its guns, signed the agreement with Russia a year later, and paid an advance in 2019. The missile systems were originally scheduled to be delivered between 2020 and 2023 and the supplies are expected to commence now. Both New Delhi and Washington have been in conversations over the deal. India has stressed on the tactical importance of the defence missile systems considering the environment in the Indian subcontinent.

The CAATSA was passed when the U.S. sought to discourage trade in the defence and intelligence sectors of Russia, a country perceived to have interfered with the 2016 U.S. presidential election. The Act mandates the President to impose at least five of the 12 sanctions on persons engaged in a “significant transaction” with Russian defence and intelligence sectors. These sanctions include suspending export licence, banning American equity/debt investments in entities, prohibiting loans from U.S. financial institutions and opposing loans from international finance institutions.

The Act also built in a safety valve in the form of a presidential waiver. This was written into the law after much persuasion and is interpreted as one crafted to accommodate countries like India. Policy planners on either side are aware of the law and the provisions to work around it. Ms. Sherman and Secretary of State Antony Blinken, who came to India earlier this year, cannot be expected to announce whether India can secure a waiver from President Joe Biden when the time comes for the White House to make a decision.

The “modified waiver authority” allows the President to waive sanctions in certain circumstances. He has to decide whether the move is in American interest; does not endanger the country’s national security; and affect its military operations in an adverse manner. In addition, he has to determine whether the country in question is taking steps to bring down its inventory of defence equipment from Russia and cooperating with Washington on matters of critical security. There are a few more provisions including one that allows for sanctions waivers for 180 days, provided the administration certifies that the country in question is scaling back its ties with Russia.

The debate in the U.S. hovers around the efficacy of such sanctions against India when the geopolitical situation in the region is undergoing a change. Today, there is a growing relationship between China and Russia with both countries seeking to expand engagement in Afghanistan from where the U.S. withdrew its military after two decades of war. India turned sullen over the manner in which the U.S. negotiated the exit deal with the Taliban. Yet, on the strategic plane, India remained on course by agreeing to the upgrading of the Quadrilateral Security Dialogue and sharing the same vision as the U.S. on the Indo-Pacific construct.

Sanctions have the tremendous potential of pulling down the upward trajectory of the bilateral relationship between the U.S. and India, which now spans 50 sectors, especially in the field of defence. The U.S.’s apprehension is that bringing India under a sanctions regime could push New Delhi towards its traditional military hardware supplier, Russia. Till about a decade ago, an influential segment of the Indian political leadership and top bureaucracy remained wary of deeper engagement with the U.S. Sanctions can stir up the latent belief that Washington cannot be relied upon as a partner.