The sanctions cloud over India-U.S. ties
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The Chief of the Air Staff, Air Chief Marshal V.R. Chaudhari, recently said that the delivery of the S-400 Triumf air defence systems from Rus- sia is expected according to sche- dule. In response, U.S. Deputy Secre- tary of State Wendy Sherman hoped that both the U.S. and India could re- solve the issue. The “issue” here is that receiving the missile systems could attract for India sanctions un- der the Countering America’s Adver- saries through Sanctions Act (CAAT- SA), enacted by the U.S. Congress. Ms. Sherman emphasised that the 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 bil- lion (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 la- ter, and paid an advance in 2019. The missile systems were originally sche- duled to be delivered between 2020 and 2023 and the supplies are ex- pected to commence now. Both New Delhi and Washington have been in conversations over the deal. India has stressed on the tactical impor- tance 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. presi- dential election. The Act mandates the President to impose at least five of the 12 sanctions on persons en- gaged in a “significant transaction” with Russian defence and intelli- gence sectors. These sanctions in- clude suspending export licence, banning American equity/debt in- vestments in entities, prohibiting loans from U.S. financial institutions and opposing loans from interna- tional 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. Policy planners on either side are aware of the law and the provisions to work around it. Ms. Sherman and Secretary of State Antony Blinken, who came to India earlier this year, cannot be expected to announce whether India can se- cure a waiver from President Joe Bi- den when the time comes for the White House to make a decision. The “modified waiver authority” allows the President to waive sanc- tions in certain circumstances. He has to decide whether the move is in American interest; does not endan- ger the country’s national security; and affect its military operations in an adverse manner. In addition, he has to determine whether the coun- try in question is taking steps to bring down its inventory of defence equipment from Russia and cooper- ating 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 ecacy 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 Rus- sia with both countries seeking to ex- pand engagement in Afghanistan from where the U.S. withdrew its mil- itary 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 Dia- logue 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 relation- ship between the U.S. and India, which now spans 50 sectors, espe- cially in the field of defence. The U.S.’s apprehension is that bringing India under a sanctions regime could push New Delhi towards its tradition- al military hardware supplier, Russia. Till about a decade ago, an inuential segment of the Indian political lea- dership and top bureaucracy re- mained wary of deeper engagement with the U.S. Sanctions can stir up the latent belief that Washington can- not 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 de- creased by 33% between 2011-15 and 2016-20 and Russia was the most af- fected 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 includ- ing S400, Ka-226-T utility helicop- ters, BrahMos missiles and produc- tion of AK-203 assault ries. On the other hand, over the past decade, government-to-government deals with the U.S. touched $20 bil- lion and deals worth nearly $10 bil- lion 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 tech- nologies. Today, manufacturers in both countries are exploring ways to co-develop and co-produce military equipment. What next? 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 al- ly, Turkey. China was the first coun- try to attract the provision after it procured the S-400. Should India be treated with a different yardstick? A section of inuential lawmakers in the Democratic Party hold a different view. 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; and the third is clea- rance 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 Rela- tions Committees. This powerful committee, headed by Senator Bob Menendez, wrote to Defence Secre- tary Lloyd Austin ahead of his visit to New Delhi in March this year that he must inform India of the perils of the deal, while a Republican, Todd Young, on the panel argued against it. The CAATSA test will determine the course of the India-U.S. strategic partnership. Will the Biden adminis- tration sail through opposition with- in his party in allowing India a clear passage? 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. K.V. Prasad is a journalist and former Fulbright-APSA Fellow with the U.S. Congress The debate in the U.S. hovers around the ecacy of CAATSA-related sanctions against India In this file photo, S-400 air defence system is displayed at the exposition field in Kubinka Patriot Park outside Moscow. * AFP The sanctions cloud over India-U.S. ties K.V. Prasad
Transcript of The sanctions cloud over India-U.S. ties
The Chief of the Air Staff�, Air ChiefMarshal V.R. Chaudhari, recentlysaid that the delivery of the S-400Triumf air defence systems from Rus-sia is expected according to sche-dule. In response, U.S. Deputy Secre-tary of State Wendy Sherman hopedthat both the U.S. and India could re-solve the issue. The “issue” here isthat receiving the missile systemscould attract for India sanctions un-der the Countering America’s Adver-saries through Sanctions Act (CAAT-SA), enacted by the U.S. Congress.Ms. Sherman emphasised that theU.S. thinks it’s “dangerous” for “anycountry that decides to use theS-400”. India is scheduled to receivefi�ve squadrons of the surface-to-airmissile systems under the $5.43 bil-lion (₹�40,000 crore) agreement itsigned three years ago.
Enactment of CAATSAEven though CAATSA was signed intolaw by then President Donald Trumpin 2017, India stuck to its guns, signedthe agreement with Russia a year la-ter, and paid an advance in 2019. Themissile systems were originally sche-duled to be delivered between 2020and 2023 and the supplies are ex-pected to commence now. Both NewDelhi and Washington have been inconversations over the deal. Indiahas stressed on the tactical impor-tance of the defence missile systemsconsidering the environment in theIndian subcontinent.
The CAATSA was passed when theU.S. sought to discourage trade in thedefence and intelligence sectors ofRussia, a country perceived to haveinterfered with the 2016 U.S. presi-dential election. The Act mandatesthe President to impose at least fi�veof the 12 sanctions on persons en-gaged in a “signifi�cant transaction”with Russian defence and intelli-gence sectors. These sanctions in-clude suspending export licence,banning American equity/debt in-vestments in entities, prohibitingloans from U.S. fi�nancial institutionsand opposing loans from interna-
tional fi�nance institutions.The Act also built in a safety valve
in the form of a presidential waiver.This was written into the law aftermuch persuasion and is interpretedas one crafted to accommodatecountries like India. Policy plannerson either side are aware of the lawand the provisions to work around it.Ms. Sherman and Secretary of StateAntony Blinken, who came to Indiaearlier this year, cannot be expectedto announce whether India can se-cure a waiver from President Joe Bi-den when the time comes for theWhite House to make a decision.
The “modifi�ed waiver authority”allows the President to waive sanc-tions in certain circumstances. Hehas to decide whether the move is inAmerican interest; does not endan-ger the country’s national security;and aff�ect its military operations inan adverse manner. In addition, hehas to determine whether the coun-try in question is taking steps tobring down its inventory of defenceequipment from Russia and cooper-ating with Washington on matters ofcritical security. There are a fewmore provisions including one thatallows for sanctions waivers for 180days, provided the administrationcertifi�es that the country in questionis scaling back its ties with Russia.
The debate in the U.S. hoversaround the effi�cacy of such sanctionsagainst India when the geopoliticalsituation in the region is undergoinga change. Today, there is a growingrelationship between China and Rus-
sia with both countries seeking to ex-pand engagement in Afghanistanfrom where the U.S. withdrew its mil-itary after two decades of war. Indiaturned sullen over the manner inwhich the U.S. negotiated the exitdeal with the Taliban. Yet, on thestrategic plane, India remained oncourse by agreeing to the upgradingof the Quadrilateral Security Dia-logue and sharing the same vision asthe U.S. on the Indo-Pacifi�cconstruct.
Sanctions have the tremendouspotential of pulling down the upwardtrajectory of the bilateral relation-ship between the U.S. and India,which now spans 50 sectors, espe-cially in the fi�eld of defence. TheU.S.’s apprehension is that bringingIndia under a sanctions regime couldpush New Delhi towards its tradition-al military hardware supplier, Russia.Till about a decade ago, an infl�uentialsegment of the Indian political lea-dership and top bureaucracy re-mained wary of deeper engagementwith the U.S. Sanctions can stir upthe latent belief that Washington can-not be relied upon as a partner.
Decrease in importsOver the last decade, India’s militarypurchase from Russia has steadilydeclined. India’s import of arms de-creased by 33% between 2011-15 and2016-20 and Russia was the most af-fected supplier, according to a reportby the Stockholm-based defencethink-tank SIPRI. In recent years,though, there have been some big-
ticket deals worth $15 billion includ-ing S400, Ka-226-T utility helicop-ters, BrahMos missiles and produc-tion of AK-203 assault rifl�es.
On the other hand, over the pastdecade, government-to-governmentdeals with the U.S. touched $20 bil-lion and deals worth nearly $10 bil-lion are under negotiation. The U.S.designated India as a Major DefencePartner in 2016. It later gave IndiaStrategic Trade Authorisation-1which allows access to critical tech-nologies. Today, manufacturers inboth countries are exploring ways toco-develop and co-produce militaryequipment.
What next?There are advocates in the U.S. whostrongly favour imposing sanctionson India following the U.S.’s decisionto impose restrictions on its NATO al-ly, Turkey. China was the fi�rst coun-try to attract the provision after itprocured the S-400. Should India betreated with a diff�erent yardstick? Asection of infl�uential lawmakers inthe Democratic Party hold a diff�erentview.
There are three clear steps in thisregard. The fi�rst is the presidentialdetermination on waiver; the secondis the referral to the CongressionalCommittees; and the third is clea-rance by these panels. While referralto the Armed Services is spelled out,it is a distinct possibility that this willbe sent to the Senate Foreign Rela-tions Committees. This powerfulcommittee, headed by Senator BobMenendez, wrote to Defence Secre-tary Lloyd Austin ahead of his visit toNew Delhi in March this year that hemust inform India of the perils of thedeal, while a Republican, ToddYoung, on the panel argued againstit.
The CAATSA test will determinethe course of the India-U.S. strategicpartnership. Will the Biden adminis-tration sail through opposition with-in his party in allowing India a clearpassage? While the administrationwill have to do the heavy lifting, therole of Indian-Americans should besignifi�cant just as they rallied aroundto support the historic Civil NuclearDeal in the face of stiff� resistancefrom Democrats opposed to nuclearproliferation.
K.V. Prasad is a journalist and formerFulbright-APSA Fellow with the U.S. Congress
The debate in the U.S. hovers around the effi�cacy of CAATSA-related sanctions against India
In this fi�le photo, S-400 air defence system is displayed at the exposition fi�eldin Kubinka Patriot Park outside Moscow. * AFP
The sanctions cloud over India-U.S. ties
K.V. Prasad
