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24 October – EFFICENCY OF CAATSA SANCTIONS

India is expecting the delivery of the S-400 Triumf air defence systems from Russia very soon. Receiving the missile systems could attract for India sanctions under the Countering America’s Adversaries through Sanctions Act (CAATSA), enacted by the U.S. Congress.

U.S. thinks it’s “dangerous” for “any country that decides to use the S-400”.

India is scheduled to receive five squadrons of the surface-to-air missile systems under the $5.43 billion (Rs 40,000 crore) agreement it signed three years ago.

Enactment of CAATSA

• Even though CAATSA was signed into law by then President Donald Trump in 2017, India stuck to its guns, signed the agreement with Russia a year later (2018), and paid an advance in 2019.
• The missile systems were originally scheduled to be delivered between 2020 and 2023 and the supplies are expected to commence now. Both New Delhi and Washington have been in conversations over the deal. India has stressed on the tactical importance of the defence missile systems considering the environment in the Indian subcontinent.
• The CAATSA was passed when the U.S. sought to discourage trade in the defence and intelligence sectors of Russia, a country perceived to have interfered with the 2016 U.S. presidential election.
• The Act mandates the President to impose at least five of the 12 sanctions on persons engaged in a “significant transaction” with Russian defence and intelligence sectors.
• These sanctions include suspending export licence, banning American equity/debt investments in entities, prohibiting loans from U.S. financial institutions and opposing loans from international finance institutions.
• The Act also built in a safety valve in the form of a presidential waiver. This was written into the law after much persuasion and is interpreted as one crafted to accommodate countries like India.
• The “modified waiver authority” allows the President to waive sanctions in certain circumstances. He has to decide whether the move is in American interest; does not endanger the country’s national security; and affect its military operations in an adverse manner.
• In addition, he has to determine whether the country in question is taking steps to bring down its inventory of defence equipment from Russia and cooperating with Washington on matters of critical security. There are a few more provisions including one that allows for sanctions waivers for 180 days, provided the administration certifies that the country in question is scaling back its ties with Russia.
• The debate in the U.S. hovers around the efficacy of such sanctions against India when the geopolitical situation in the region is undergoing a change. Today, there is a growing relationship between China and Russia with both countries seeking to expand engagement in Afghanistan from where the U.S. withdrew its military after two decades of war.
• India turned sullen over the manner in which the U.S. negotiated the exit deal with the Taliban. Yet, on the strategic plane, India remained on course by agreeing to the upgrading of the Quadrilateral Security Dialogue and sharing the same vision as the U.S. on the Indo-Pacific construct.
• Sanctions have the tremendous potential of pulling down the upward trajectory of the bilateral relationship between the U.S. and India, which now spans 50 sectors, especially in the field of defence.
• The U.S.’s apprehension is that bringing India under a sanctions regime could push New Delhi towards its traditional military hardware supplier, Russia. Till about a decade ago, an influential segment of the Indian political leadership and top bureaucracy remained wary of deeper engagement with the U.S. Sanctions can stir up the latent belief that Washington cannot be relied upon as a partner.

Decrease in imports

• Over the last decade, India’s military purchase from Russia has steadily declined. India’s import of arms decreased by 33?tween 2011-15 and 2016-20 and Russia was the most affected supplier, according to a report by the Stockholm-based defence think-tank SIPRI.
• In recent years, though, there have been some big-ticket deals worth $15 billion including S400, Ka-226-T utility helicopters, BrahMos missiles and production of AK-203 assault rifles.
• On the other hand, over the past decade, government-to-government deals with the U.S. touched $20 billion and deals worth nearly $10 billion are under negotiation.
• The U.S. designated India as a Major Defence Partner in 2016.
• It later gave India Strategic Trade Authorisation-1 which allows access to critical technologies. Today, manufacturers in both countries are exploring ways to co-develop and co-produce military equipment.

Road Ahead

• There are advocates in the U.S. who strongly favour imposing sanctions on India following the U.S.’s decision to impose restrictions on its NATO ally.
• Turkey. China was the first country to attract the provision after it procured the S-400.
• Difference yardstick for India
• There are three clear steps in this regard. The first is the presidential determination on waiver.
• The second is the referral to the Congressional Committees.
• The third is clearance by these panels.
• While referral to the Armed Services is spelled out, it is a distinct possibility that this will be sent to the Senate Foreign Relations Committees.

The CAATSA test will determine the course of the India-U.S. strategic partnership.While the administration will have to do the heavy lifting, the role of Indian-Americans should be significant just as they rallied around to support the historic Civil Nuclear Deal in the face of stiff resistance from Democrats opposed to nuclear proliferation.

(Paper-2/ International Relations/ USA)

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