CAATSA sanctions & its impact on the Indo-US strategic partnership

The first S-400 unit is likely to be delivered to India by the end of this year. However, the US $5.5bn deal for five long-range surface-to-air missile systems between India and Russia, to deter China, has another component—United States—as deliberations continue on whether New Delhi should get a waiver from the Countering American Adversaries Through Sanctions Act (CAATSA).

• In 2018, India had signed a USD 5 billion deal with Russia to buy five units of the S-400 air defence missile systems, despite a warning from the then Trump administration that going ahead with the contract may invite US sanctions.
• The US has already imposed sanctions on Turkey under the CAATSA for the purchase of a batch of S-400 missile defence systems from Russia.
• Following the US sanctions on Turkey over the procurement of S-400 missile systems, there were apprehensions that Washington may impose similar punitive measures on India.

• Russia has been one of India's key major suppliers of arms and ammunition.

What is CAATSA?

• Passed in August 2017, the Countering America’s Adversaries Through Sanctions Act (CAATSA) provides for sanctions by the US against countries that do business with Moscow.
• It targets countries that buy major defence systems from Russia. America wanted to punish Russia for the annexation of Crimea in 2014 and the alleged interference in the American presidential election in 2016.
• CAATSA seeks to undermine Russia’s defence and intelligence sectors and deny Moscow her share of the international military hardware market.
• The US has targeted Russia’s defence exports and the oil and gas sectors because together, they contribute a major chunk to that nation’s exports.

• Interestingly, India is not the only one that is worried about CAATSA.
• The US administration, too, fears that these sanctions -- if they are not waived -- would undermine the strategic/diplomatic investment it has made on India.

• A strong tool to counter China: The USA should remember that a militarily strong India with support from Russia can be an effective deterrence against China and any steps contrary to it may hinder Washington’s ambitions to partner with India as a counter-balance to Beijing.
• India is not an adversary and is not in any formal alliance with the US and, unlike Turkey, India’s is not a NATO signatory. As a strategic partner, India is not obligated to the US in the same manner as Ankara is.
• Impact on relationship: Any move to impose sanctions on India under CAATSA could threaten America’s relationship with India, a potential partner in counterbalancing China.
• Aligned objectives: The US and India are aligned in several crucial areas:
  • a free and open Indo-Pacific
  • anti-terrorism
  • ending the pandemic
  • resilient global supply-chains, trade, cyber security, space, education, climate change
  • commitment to democracy
• India’s growing influence: India’s crucial role as part of the “Quad” grouping and its pivotal role in the Indo-Pacific region cannot be ignored.

Acknowledging close relationship: US have to acknowledge the close defence relationship shared by India and Russia before threatening the former with sanctions.

• Russia provided nearly two-thirds (62 percent) of all Indian arms imports.
• The Naval fleet is almost entirely of Russian origin, while the Army is dependent for spares, particularly for its Main Battle Tanks.
• The wide-ranging relationship also includes joint production of the Brahmos missile, mass production of AK-203 rifles, and licensed production of Sukhoi-30s among others.

• In contrast to the United States, Russia’s technology is more compatible with India’s arsenal, making it an attractive and more convenient option for India.
• Joint production and transfer of technology are some of the most valuable aspects of the India-Russia defence relationship.
• Russia’s technology, combined with India’s low production cost, supports India’s effort to indigenize its weapons.

Sanctions would:

• Impact of cooperation: It would put on hold the Major Defense Partnership the two countries share, derail Quad cooperation
• Negative effect on sectors: It will have a negative ripple effect on more than 40 ongoing dialogues between the two democracies, including those related to: defense trade, military exercises, and vaccine diplomacy
• Further push towards Russia: It would push India back to Russia as a preferred and reliable source of weapons, increasing rather than decreasing the strength of Russia’s defense sector
• Strengthening China: It would weaken a common front deterring China’s most destabilizing activity in the region
• Cut-off market for US: It would cut off India’s critical long-term market for the U.S. defense industry.
• Public backlash: The public backlash would place a political chill on relations, and it is unlikely that the damage would be limited to the defense sector.