Context: The US has imposed sanctions on NATO-ally Turkey for its purchase of Russia’s S-400 missile defence system.
Turkey defies the US

• Turkey decided to move ahead with the procurement and testing of the S-400, despite the availability of alternative, NATO-interoperable systems to meet its defence requirements.
• This decision resulted in Turkey’s suspension and pending removal from the global F-35 Joint Strike Fighter partnership.

What is CAATSA?

• CAATSA stands for Countering America’s Adversaries through Sanctions Act (CAATSA).
• It is a US federal law that imposed sanctions on Iran, North Korea, and Russia.

The bill provides sanctions for activities concerning:

• (1) cybersecurity, (2) crude oil projects, (3) financial institutions, (4) corruption, (5) human rights abuses, (6) evasion of sanctions, (7) transactions with Russian defence or intelligence sectors, (8) export pipelines, (9) privatization of state-owned assets by government officials, and (10) arms transfers to Syria.

Why is India concerned?

• This sanction is of particular interest to New Delhi, which is also in the process of buying the S-400 from Moscow.
• This action has sent a clear signal that the US will fully implement CAATSA sanctions and will not tolerate significant transactions with Russia’s defence and intelligence sectors.

What does the sanction mean?
These sanctions comprise

• a ban on granting specific US export licences and authorizations for any goods or technology,
• a ban on loans or credits by US financial institutions totalling more than $10 million in any 12-month period.
• a ban on US Export-Import Bank assistance for exports
• Additionally, sanctions will include full blocking sanctions and visa restrictions as well.
• Last year, the US had removed Turkey from its F-35 jet programme over concerns that sensitive information could be accessed by Russia if Turkey used Russian systems along with US jets.

India may get an exemption

• Most of India’s weapons, naval arsenal, missiles, aircraft and aircraft carriers are of Soviet/Russian origin.
• As per the Stockholm International Peace Research Institute (SIPRI) Arms Transfer Database, during the period 2010-17, Russia was the top arms supplier to India.
• The Russian share in India’s arms imports during the same period has declined to 68 per cent, from an all-time high of 74 per cent during the 2000s.
• The combined share of the US and Israel has increased from nine to 19 per cent.
• Accounting for about 15 per cent, the US is the second-biggest supplier of arms to India during the five year period ending 2017.
• Hence, US officials have earlier requested for “some relief from CAATSA” for countries like India.

China factor

• China being more assertive and Russia finding new partners, this waiver or “carve-out” would mean India has been able to secure its interests.
• Hence, the US has designated India as a Major Defence Partner, and both countries coming together on Indo-Pacific strategy, the newly formed Quad, are on a stable footing.

Why is CAATSA bad?

• CAATSA impacts Indo-US ties and dents the image of the US as a reliable partner.
• It also makes a point on principles that, as a sovereign country, India cannot be dictated about its strategic interests by a third country.
• It also shows the need for India to be nimble-footed in its diplomacy when it comes to its key major power relationships – and one cannot be sacrificed at the cost of another.

India-US Defence Partnership

• India is a major market for the US defence industry.
• In the last decade, it has grown from near zero to USD 15 billion worth of arms deals.
• Since 2008, major deals include the C-17 Globemaster, C-130J transport planes, P-8 (I) maritime reconnaissance aircraft, M777 light-weight howitzer, Harpoon missiles, and Apache and Chinook helicopters.
• In percentage terms, the US share of Indian arms imports total 23 per cent in terms of the number of contracts and 54 per cent by value.
• This value is all set to increase further with the US likely accepting an Indian request for Sea Guardian drones.

Additional Information