The US House of Representatives has passed by voice vote a legislative amendment that approves waiver to India against the punitive CAATSA sanctions for its purchase of the S-400 missile defence system from Russia.
The amendment was authored and introduced by Indian-American Congressman Ro Khanna.
It had urged the Biden administration to use its authority to provide India with a CAATSA waiver to in the face of aggression from China.
What is the CAATSA?
CAATSA is a law that came into effect in the US in 2017, meant to punish countries having deep engagements with Russia, North Korea, and Iran using economic sanctions.
It said countries having a “significant transaction” with Russian intelligence and military agents will be subject to at least five kinds of sanctions.
Ordinary transactions will not invite sanctions, and the decision of who has sanctions imposed on them comes down to the interpretation of “significant transaction”.
This is one of the various waivers or exemptions mentioned, such as the transaction not affecting US strategic interests, not endangering the alliances it is a part of, etc.
Why did the US enact a law like CAATSA?
The US flagged issues of Russia’s alleged interference in the 2016 Presidential elections, and its role in the Syrian war as some of the reasons for punishing engagement with it.
EU countries that had even more significant ties with Russia for oil and gas supply before the Ukraine-Russia conflict in 2022, had also criticised CAATSA.
Countries facing sanctions
The US has placed sanctions on China and Turkey for purchase of the S-400.
The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the US jurisdiction and a visa ban.
Reasons behind exemption to India
CAATSA impacts Indo-US ties, and dents the image of the US as a reliable partner at a time when it is projecting India as a key player in its Indo-Pacific strategy.
US administration for countries like India has favoured relief, citing the “strategic opportunity” that India presents, and also the opportunity “to trade in arms with India”.
Indeed, the US defence industry sees India as a major market, over the last decade, deals with India have grown from near zero to $15 billion.
Both in term of the number and value of contracts, the US is way ahead of other major suppliers.
The CAATSA exemption also underlines the growing defence and security cooperation that has seen India sign a logistics pact with the US.
Also US designated India as a Major Defence Partner, and both countries coming together on Indo-Pacific strategy, the newly resurrected Quad.
It also marks an acceptance by the US of the point of principle that as a sovereign country, India cannot be dictated on its strategic interests by a third country.
Benefits to US by this waiver
This connection is centred on an eventual ‘payback’ to the US for lifting the spectre of CAATSA, looming over New Delhi since 2018.
India is procuring some 140-odd F/A-18s for both the Indian Navy and the Indian Air Force for around $30-35 billion.
Prospective F/A-18 sales would significantly boost the US economy, buffeted by unemployment and inflation running at 8.6%, its highest since 1981.
The waiver amendment also urged the US to do more to support India’s decision to reduce its reliance on Russian-made weapons.
Why did India sign the S-400 deal?
Security paradigm: S-400 is very important for India’s national security considerations due to the threats from China, Pakistan and now Afghanistan.
Air defence capability: The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
Russian legacy: Integrating the S-400 will be much easier as India has a large number of legacy Russian air defence systems.
Strategic autonomy: For both political as well as operational reasons, the deal is at a point of no return.
The revision in bilateral ties is consistent with the prevailing strategic tone of bilateral ties.
Through associations like Quad and, more recently, I2U2, strategic linkages have also been strengthened.
India’s strategic interests require a shift away from Russians who are increasingly leaning over China.
Following its invasion of Ukraine, Russia’s reliance on China has grown dramatically, and this position is considered unlikely to change in the near future.