Countering America’s Adversaries Through Sanctions Act (CAATSA)

• India and Russia have concluded the contract for five S-400 ‘Triumf’ missile systems, one of the biggest defence deals in recent times.
• However, the U.S. has warned the deal would invoke sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) law.

What is CAATSA?

• The Act codifies existing U.S. sanctions against Russia. This Act constrains the executive branch's ability to remove any of the sanctions currently in place.
• This act restrict the persons and companies from providing goods or services to designated entities for certain types of oil projects in Russia.
• The Act also requires the President to impose secondary sanctions on any foreign persons who knowingly make a significant investment in special Russian crude oil projects.
• Furthermore, the Act allows the President, in coordination with U.S. allies, to impose sanctions on persons who invest more than a certain amount in the construction of Russian energy export pipelines, goods, services, technology, information, or support.
• This act allows the President to impose secondary sanctions on non-U.S. companies that may invest in such projects.
• Furthermore, the Act imposes mandatory sanctions on those who knowingly engage in significant activities undermining cybersecurity against any person or government on behalf of Russia.
• This act imposes additional mandatory sanctions against Iran in response to its ballistic missile program, and terrorism-related sanctions against the Iranian Revolutionary Guard Corps (IRGC) and other Iranian sponsors of terrorism. Blocking sanctions can be imposed on persons responsible for human rights abuses, at the discretion of the President, and blocking sanctions will be implemented against Iranian persons who violate the arms embargo against Iran.
• The Act also requires the President to impose sanctions on purchasing certain metals or minerals from North Korea and providing financial services to the North Korean government.

Analysis:

• CAATSA is unlikely to be imposed on India anytime soon. As a sovereign country, India cannot be dictated to go slow or suspend its existing or future defence cooperation with Russia.
• It is also practically impossible for India to ignore Russia in view of the latter’s importance in meeting some of the critical defence hardware requirements of the Indian armed forces and also because of the overwhelming share of Russian weaponry in the Indian arms inventory, the upkeep of which necessitates New Delhi’s continued dependence on Moscow for the foreseeable future.
• At the same time, India also needs to be prepared for any eventual CAATSA-related sanctions, which, though unlikely in the immediate future, may surface in the long run.
• India may safeguard its interests by expanding the scope of its existing guidelines for penalties in business dealings to include a provision for banning defence companies of countries which resort to banning entities of other countries for foreign policy purposes.

By: Vishal