As the world enters a new decade, we foresee opportunities and challenges ahead. For India, there lies a ‘test of ties’, ties with Russia and the US. These ties will be tested in the year-end when India will receive the first batch of the S-400 missile defence system, which will come under the scanner of the infamous CHEATS. With America having announced secondary sanctions against its NATO-ally Turkey for purchase of the S-400, India comes next on the list. In July this year, the US reiterated its stand on CAATSA, saying countries engaged in defence deals with Russia should not rely on getting a waiver from the US. These comments came shortly after the Defence Acquisition Council (DAC) of India approved emergency procurement of 21 MiG-29 fighter jets, an upgrade for 59 of these and the acquisition of 12 Su-30 MKI jets which are license-produced by the Hindustan Aeronautics Limited (HAL), worth ₹18,148 crores (1.8 billion). A similar warning was received by India in 2017 when India inked a $5.43 billion deal with Russia to procure the S-400 system.

About CAATSA

In February 2014, the Russian Federation annexed Crimea from Ukraine. Following this, the US imposed sanctions as punitive measures. Two years later, Russia was accused of meddling in American elections. The US senate then passed the Countering Russian Influence in Europe and Eurasia Act (CRIMEA) in May 2017. With Iran accused of not complying to its nuclear deal and North Korea continuing to expand and upgrade its nuclear arsenal even after repeated warnings, the US Senate then passed the Countering America’s Adversaries Through Sanctions Act (CAATSA) under a republican-controlled congress in July 2017. Provisions of CRIMEA were incorporated in this new act. Section 231 of the law provides the US president for secondary sanctions on countries that engage in “significant transaction” with the below mentioned countries. Section 235 empowers the US president to impose at least 5 of the 12 listed sanctions, based on his choice.

Title 2 of the law primarily deals with sanctions on Russian interests such as the oil and gas industry, defence and security sector and financial institutions. Under this federal law, America has made the following provisions to sanction Russia, Iran and North Korea under the pretext of disturbing world peace and tranquillity.

Countering Iran’s Destabilizing Activities Act of 2017

Requires the president to impose sanctions against:

• Iran’s ballistic missile and weapons of mass destruction programs.
• Sale or transfer of military equipment to Iran including the provision of technical or financial assistance.
• Iran’s Revolutionary Guard corps.

The President may impose sanctions against persons responsible for violation of Human rights in Iran.

The President may waive off sanctions under specified circumstances.

Countering Russian Influence in Europe and Eurasia Act of 2017

Includes sanctions for activities concerning cybersecurity, crude oil projects, financial institutions, corruption, human rights abuses, evasion of sanctions, transactions with Russian defence or intelligence sectors, export pipelines, privatization of state-owned assets by government officials, and arms transfers to Syria.

To waive off sanctions, the President must submit to the Senate a review of proposed actions except for specified cyber and Ukraine related sanctions.

The Department of State shall work along with the government of Ukraine to enhance Ukraine’s energy security.

Korean Interdiction and Modernization of Sanctions Act

The bill provides for sanctions against North Korean cargo and shipping, goods produced in whole or part by North Korean convicts or forced labour, and foreign persons that employ North Korean forced labourers.

Authorises the President to impose sanctions on persons involved in violation of certain UNSC resolutions regarding North Korea.

Restricts certain types of US foreign assistance to the governments who provide or receive from North Korea a defence article or service.

Apart from these sanctions, the section 241 of the act also demands listing out Russian oligarchs and most significant senior foreign political figures and their net worth, especially the ones who are close to the Russian ruling elite.

The controversy of the act

Roots of CAATSA can be found in American politics. While it was necessary for Washington to punish Russia, North Korea and Iran for their misconduct, American politics also played a role.

Donald Trump was elected as President in 2016, but shortly after this, there was a political outrage in the US over Russian involvement in the elections. The opposition democrats alleged that Mr Trump “used” Russian hackers to win elections. An investigation was thrown open and the allegations seemed to be evident and now Mr Trump had to do something to save his seat. With Russia violating international law in 2014 by annexing Crimea, Mr Trump needed to take action against Russia otherwise it would be certain that Mr Trump is doing a favour to the Russians. Thus, he reluctantly signed this law which was apparent from the fact that he called the law “seriously flawed”.

Also, if one observes, this law was purposely designed not only to sanction Russia but also to drag her out of the global arms supplier market. For if countries are restricted from buying the Russian equipment then the US might offer its counterpart equipment, which will benefit the American arms manufacturers like Boeing, Lockheed Martin, Northrop Grumman, etc. The US has also sanctioned several Russian tycoons closely associated with the Russian regime.

The Aftermath

Since the passage of the law in 2016, the US has been warning several countries against the purchase of Russian arms. China was the first country to be sanctioned under CAATSA for the purchase of Sukhoi Su-35 and S-400 system from Russia. Other countries sanctioned under the law include Venezuela, Kyrgyzstan, Cuba, Syria, Iran and Lebanon. In December 2020, Turkey became the first American ally to be sanctioned under the COSTS for buying the S-400 system. In July 2019, Turkey was removed from the F-35 fighter jet Programme as a warning.

Even the European Union has expressed criticism over the law. The law creates issues over the construction of Nord Stream 2 natural gas pipeline between Germany and Russia. Businesses involved in Nord Stream 2 have been sanctioned by the United States, which has been seeking to sell more liquefied natural gas (LNG) to its European allies.

Even in South Asia, there are concerns about the law as this could hamper the “anti-China” coalition. The US could lose its diplomatic hold in the South Asia and South Pacific region which would pave the way for China to increase its influence in the region.

More Challenges ahead

While CASA would be the starting point of the test, there are other issues as well. First is the growing belief regarding formalisation of the Quadrilateral security dialogue or Quad. Russia has expressed concerns over the bloc, saying “it would be detrimental to inclusive dialogue for ensuring peace and stability in the region”. This can also be connected to the postponement of the India-Russia annual summit for the first time. Secondly, in recent years, India-US relations have grown close with the signing of four foundational agreements, inclusion of Australia in the Malabar exercise and growing defence trade which has kept Russia isolated. Thus, the S-400 deal was not only important from defence point of view but diplomatically as well, for it will keep the Russians happy for another few years. Further, India and Russia have finalised the 7.7 lakh AK-203 rifles deal and have also  concluded the price negotiations for 200 Kamov ka226T deal in Joint venture which is expected to be signed soon. But with a growing Chinese assertiveness, Russia cannot be entrusted for support. Backstabbing of Armenia by Russia during the former’s conflict with Azerbaijan this year casts a shadow on Russian role during an Indo-China conflict, which demanded India to approach the west.

Conclusion

A way forward for India will be by reiterating its stance on the policy of non-alignment and at the same time engaging with regional non-aligned nations like Bangladesh, Nepal, Sri Lanka and others like Qatar, Singapore, Philippines, Vietnam, etc. Recent visit of COAS General MM Naravane to UAE, Saudi Arabia and South Korea indicate that India’s foreign policy is moving towards multilateralism, which, to some extent can help India balance the ties. There is also a need to make investments in R&D of our defence projects like AMCA, P75I, Light utility helicopters, assault rifles, etc., which will not only make us self-reliant but also save us from the forthcoming situation.

On America’s part, the CAATSA is seriously flawed. For it may have done its job of punishing Russia through sanctions and reduced military contracts from American friends, in the near future it will certainly become harmful for the US diplomatic relations across the globe. Giving a waiver to some favoured nation like India as even the other countries may ask for a waiver which will abruptly end the sole purpose of the CAATSA law. A solution to this can – the American diplomatic influence – which can be used to convince the target country in not buying Russian equipment. The US can offer her equipment at a good price, offer investment in R&D, development projects of the target country and enhance trade relations. This way, the US will build trust with nations across the globe and at the same time keep the Russians isolated. Also, with a changing balance of power, China is emerging as a superpower and the year 2020 saw a sample of her growing assertiveness and expansionist policy. The US thus needs to re-strategize its role and unite with the rest of the world to maintain global peace and order. The new government under president-elect Joe Biden will hopefully find a solution to this issue.