Daily Times

India’s decision to buy the S-400 Triumf air defence system from Russia, which has come at a whopping cost of USD 5.4 billion, has evoked fears of a further arms race in the region. What is lesser known, but equally important, is that the S-400 purchase – which falls within the purview of an important US legislation penalizing such weapons purchases – may be conveniently overlooked by the US in the context of its larger geo-strategic pursuits in South Asia.

The law in question is the Countering America’s Adversaries Through Sanctions Act known as CAATSA, which was passed by the US Congress in 2017.

CAATSA, and similar domestic laws in the US, are part of an emerging narrative to use law as a weapon of war against an adversary country. The objective is to compel the adversary to conform to expected norms and penalize it through sanctions if it fails to do so.  “Law fare” is the term used to describe this use of law as a weapon of war.

CAATSA law fare’s intended targets are Russia, North Korea and Iran – all three countries that are on the receiving end of US opprobrium for different reasons. CAATSA, which has been touted as of one of America’s most potent weapons in the global arms race, has introduced a robust sanctions regime against Russia primarily aimed at dissuading it from arms sales to other countries.

Not surprisingly, CAATSA comes down hard on Russia.  It contains an astounding ninety-one sections covering Russia that prescribe sanctions on Russia and associate edentities for violations relating to corruption, human rights abuses and arms transfer etc.

Importantly, Section 231 of CAATSA requires the US President to impose sanctions on entities or individuals who “knowingly” engage in a “significant transaction” with a person (entity or individual) that is a part of, or operates for or on behalf of, the defense or intelligence sectors of Russia. Although CAATSA allows the US President to waive or delay imposing sanctions, the ultimate decision to impose them lies with the US Congress.

Notably, CAATSA sanctions flow both ways: they target Russia as well as countries (and their entities) that engage in a “significant transaction” with Russia.  The sanctions include denial of export licences, and prohibition on foreign exchange transactions under US jurisdiction and with the US financial system.

India’s strategic engagement with the US has reached new heights as is evident from the US-India ‘2+2’ dialogue held in September this year

Interestingly, CAATSA’s Russia specific sanctions were invoked prior to the Indian S-400 purchase. On 20thSeptember, the Trump administration extended CAATSA Section 231 to China’s Equipment Development Department (EDD) which has purchased this very S-400 system from Russia, calling it a “significant transaction”. EDD was subsequently sanctioned under CAATSA and prohibited from foreign exchange transactions under US jurisdiction and transactions with the US financial system. Arguably, the two-way sanctions under CAATSA will bite both Russia and China as they will be constrained in their use of the US dollar when contracting for military supplies with other countries.

After CAATSA sanctions on Russia and China, the looming question now is whether the CAATSA law fare will extend to India which too has engaged in a “significant transaction” with Russia?  Or rather, there would be a softening of the CAATSA edges and carving of exceptions for India on the pretext of its centrality in the larger US geo-strategic prism for South Asia?

President Trump’s response to the question of whether India will face sanctions under CAATSA was to obfuscate matters by saying that India will “soon find out” and “sooner than you think”.

However, there is widespread belief in the Indian media that India may succeed in getting a sanctions waiver under CAATSA due to its economic and geo-strategic indispensability for the US.  Concomitantly, if the US were to sanction India, the US would be harming its own bilateral military sales potential with India, one of the world’s largest global arms importers. Indicators therefore point to India getting away with sanctions on one pretext or another such as a delay in implementation of CAATSA sanctions.

In another important recent development, the US Congress passed the National Defence Authorization Act or NDAA which empowers the US President to exercise the waiver authority under CAATSA in favour of US partners such as India if the President can certify that (i) the waiver is in US national security interests; (ii) the countries offered relief are taking demonstrable steps to reduce their defence dependence on Russia; and (iii) they are cooperating with the US in advancing critical strategic interests.

India’s strategic engagement with the US has reached new heights as is evident from the US-India ‘2+2’ dialogue held in September this year.  The takeaways for India from this strategic dialogue include reaffirmation of India’s designation as a major US defence partner and signing of a Communications Compatibility and Security Agreement or COMCASA with the US.

As to whether India will face sanctions under CAATSA will also ultimately hinge on the interpretation of Section 231 of CAATSA – something that will not happen in isolation from the US’s political and strategic aspirations in South Asia.

Notably, the US State Department’s explanation on CAATSA Section 231 dated 20th September is note worthy which confirms that Section 231 sanctions on China “are not intended to undermine the military capabilities or combat readiness of any country but rather to impose costs on Russia”.

If indeed the interpretation of CAATA will be through the lens of “costs on Russia”, then India may be allowed an opportunity to wriggle out of CAATSA sanctions. This is borne by the US State Department’s guidance note dated 20th September on a “significant transaction” which provides that in determining whether a transaction is “significant” for purposes of section 231 of CAATSA, the Department of State will “consider the totality of the facts and circumstances surrounding the transaction and weigh various factors on a case-by-case basis. The factors considered in the determination may include, but are not limited to, the significance of the transaction to U.S. national security and foreign policy interests”.

While only time will tell how CAATSA law fare pans out in future, the centrality of India in the US’s geo-strategic equation for South Asian may mean that loaded interpretative carve outs such as “national security”, “totality of facts and circumstances” as set out in the US State Department’s guidance note may eventually end up shaping CAATSA as an instrument of political warfare. Ultimately the US would have succeeded in sanctioning Russia and China but at the stake of bending the CAATSA law fare in favour of India by setting a bad precedent.

The writer is a practicing international lawyer and a graduate of Harvard Law School.  He can be reached at veritas@post.harvard.edu

Published in Daily Times, October 21^st 2018.