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Explained: What is CAATSA and how US can impose sanctions on India under the Act?

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Russia-Ukraine crisis fallout: US Prez Joe Biden will have to soon decide if India can get a waiver (from sanctions) for purchases of arms and military supplies from Russia, which are in violation of US sanctions on Moscow.

Explained: What is CAATSA and how US can impose sanctions on India under the Act?

The Russian invasion of Ukraine has led to several harsh sanctions on Russia from various countries across the world. Similar sanctions were imposed when Russia had invaded Ukraine and annexed the Crimean peninsula in February-March 2014. One of the most significant sanctions was aimed at preventing the sale of Russian arms and ammunition to third-party countries, with the threat of sanctions on the buyer country.

For India, this is a critical issue as the country relies heavily on Russian military exports. Russia contributed 49 percent to India’s total military imports in 2020, according to data from the Stockholm International Peace Research Institute (SIPRI).

Now India faces a precarious situation as the country is at the risk of either facing sanctions from the US under CAATSA or cutting military supplies from Russia.

What is CAATSA?

The ‘Countering America's Adversaries Through Sanctions Act (CAATSA)’ is a piece of US legislation that imposes sanctions on American adversaries -- the states of Iran, North Korea, and Russia. The CAATSA Bill was passed in 2017.

The sanctions targeted Russia in particular for the Crimean annexation and its alleged role in the 2016 US presidential election. The provisions related to sanctions on Russia covered activities like “(1) cyber security, (2) crude oil projects, (3) financial institutions, (4) corruption, (5) human rights abuses, (6) evasion of sanctions, (7) transactions with Russian defense or intelligence sectors, (8) export pipelines, (9) privatisation of state-owned assets by government officials, and (10) arms transfers to Syria.”

The sanctions are intended to economically hurt Russia over its international actions. As part of the sanctions, the US would also economically punish any country which would try to engage in transactions with the Russian state over military purchases.

What did India do?

India has long relied on Russian military logistics after being spurned by many other western nations. India’s regional rival Pakistan was supplied the same by the US (which is ironic considering China is now Pakistan’s primary supplier while India has grown closer to the US).

It was against the backdrop of this geopolitical situation that the erstwhile USSR and India enjoyed a long, stable and fruitful international relationship.

In the immediate aftermath of the Crimean annexation, India was careful not to directly criticise Russia and jeopardise its strategic partnerships. But the country was also slowly getting closer to the US, to act as a counterweight to China in the region. It was for this reason that military purchases from the US had been increasing while those from Russia decreased.

In 2018, India signed a $5-billion deal with Russia for its advanced missile systems, the S-400 Triumf surface-to-air missile defence systems, to counter growing Chinese aggression in the Indo-Pacific region. However, the deal did attract the risk of facing automatic US sanctions as they were in contravention of CAATSA. But India could also escape the sanctions by receiving a waiver, which was included in the Act, keeping India in mind.

“Washington has been somewhat understanding because India over the last few years has diversified its defense procurement and reduced its dependency on Russia to some extent, which is one of the conditions for gaining a CAATSA waiver,” Rajeswari Pillai Rajagopalan, head of the nuclear and space policy initiative at the Observer Research Foundation, told CNBC in 2018.

The key factor to receiving the waiver was that India diversifies its arms procurement as going cold turkey overnight could seriously jeopardise India’s strategic position. India had also possibly attracted sanctions from the same Act by purchasing Iranian crude.

The decision on the grant of the waiver was essentially over a tacit understanding that the S-400 purchases were water under the bridge, but future acquisitions would be monitored more closely. India was becoming a key strategic partner for the US; and it had to walk a tightrope of deterring other countries from purchasing Russian arms while also making sure that India wasn’t pushed towards the Russians.

“CAATSA puts India in a tight spot because the country has traditionally purchased Russian defense systems. Between 2004 and 2014, roughly 75 percent of India’s weapons imports were from Russia. CAATSA asks India to stop on a dime, reverse its spending decisions, and cut out a long-time supplier,” Mukesh Aghi, President and Chief Executive Officer of the US-India Strategic Partnership Forum, had earlier said.

Aghi had claimed that a waiver for India is in the United States’ “best interest.” “US Secretary of Defense James Mattis is making a simple calculation that keeping India close is more important than punishing India for continuing to make defense purchases from Russia. His comment asks Congress to view India as a check against China, which poses the greatest national security threat to the United States -- a sentiment shared by Republicans and Democrats alike,” he said.

But now, Russia’s invasion of Ukraine has complicated the picture. With India abstaining on several symbolic United Nations votes, the US will need to again consider the geopolitical situation to decide on what to do with CAATSA and India.

"India is a really important security partner of ours now. And we value moving forward that partnership and I hope that part of what happens with the extreme criticism that Russia has faced is that India will find it's now time to further distances," said Donald Lu, Assistant Secretary of State for South and Central Asia, according to a PTI report.

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