Will a new American law and sanctions come in the way of the S-400 Triumf missile purchase?

The story so far: Exactly a year ago, on October 5, 2018, India and Russia signed a contract to buy the Russian Triumf missile system, concluding negotiations that began in 2015. During that time, however, a new U.S. law, called “Countering America’s Adversaries Through Sanctions Act” or CAATSA was passed by the U.S. Congress, which transformed what should have been a straightforward bilateral deal into a complex trilateral balancing game for India.

How significant is the Russian deal for New Delhi?

A year after Prime Minister Narendra Modi and Russian President Vladimir Putin signed an agreement for the $5.4 billion S-400 Triumf missile system (picture), the deal continues to cast a cloud over India-U.S. ties. Earlier this week, even as External Affairs Minister S. Jaishankar was meeting his American counterpart Mike Pompeo in Washington, a U.S. official reminded India of the “risks” attached to the deal. The State Department spokesperson said on Tuesday, “We urge all of our allies and partners to forgo transactions with Russia that risk triggering sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA).” This was shortly after Mr. Jaishankar reiterated at a think-tank event India’s intention to acquire the Russian system. Mr. Jaishankar had said in Washington, “We would not like any state to tell us what to buy or not to buy from Russia any more than we would like any state to tell us to buy or not buy from America,” asserting both India’s traditional ties to Russia, as well as the significance of the S-400 deal in particular.

Why is the S-400 deal important?

The agreement to purchase the Triumf missile system boosted India-Russia defence ties at a point of inflection last year.

Russia has traditionally been India’s biggest defence supplier, but was surpassed by the U.S. in the last few years, a fact that had added to a perceptible drift in bilateral ties. Mr. Putin and Mr. Modi addressed this drift with a special “reset” summit in Sochi last May, which was followed by Mr. Putin’s visit to Delhi on October 5, 2018, when the deal was announced. The Indian Air Force has also backed the superior air defence system in that it will fill the gap in India’s particular needs: countering its main adversaries and neighbours, China and Pakistan’s growing air power, while dealing with a depleting stock of fighter aircraft.

Is India the only country facing CAATSA sanctions?

By coincidence, CAATSA has now been invoked by the United States twice already, and both times for countries buying the Triumf system from Russia. In September 2018, the U.S. State Department and Treasury Department announced sanctions on China’s Equipment Development Department (EDD), the military branch responsible for weapons and equipment, for the procurement of the S-400 Triumf air defence system and Sukhoi S-35 fighter aircraft. The sanctions were triggered when the People’s Liberation Army’s took delivery of the systems. Washington expelled Turkey from the F-35 fighter jet programme in July this year after the first delivery of S-400s was received, and says sanctions are still under consideration unless Turkey reverses its deal with Russia. India is neither like China, which has an inimical relationship with the U.S., and hence not bound by its diktats, nor like Turkey which is a NATO ally of the U.S. and expected to comply with Washington’s demands, and hence hopes to escape CAATSA sanctions.

Is a sanctions waiver possible for India?

Written into the CAATSA language is also an exit clause, which states that “The [US] President may waive the application of [CAATSA] sanctions if the President determines that such a waiver is in the national security interest of the United States.” In August 2018, the U.S. Congress also modified the waiver clause to allow the President to certify that a country is “cooperating with the United States Government on other matters that are critical to United States’ strategic national security interests”. Government officials including Foreign Secretary Vijay Gokhale, National Security Adviser Ajit Doval and Mr. Jaishankar have all expressed the hope that the U.S. will exercise this waiver for the S-400 deal to India for a number of reasons: that a militarily stronger India is in the U.S.’s interests, and that India cannot completely drop its traditional dependence on Russian defence equipment without being weakened. In addition, it is no secret that U.S. President Donald Trump has misgivings about the CAATSA sanctions, which he said were meant to curtail his own powers to deal with Russia, and the other countries included in the act — Iran and North Korea. It is hoped that Mr. Trump will grant India a waiver on the deal, thanks to good bilateral relations with India and the fact that it is a “major defence partner” of the U.S.

What happens if a waiver is not granted?

Section 235 of the CAATSA legislation stipulates 12 kinds of punitive sanctions that the U.S. could place on a country conducting significant transactions in defence, energy, oil pipelines and cybersecurity technology with any of the U.S.’s “adversaries”, and according to the Act, the U.S. President may impose “five or more of the sanctions described”. These measures include export sanctions, cancellation of loans from U.S. and international financial institutions, ban on investments and procurement, restrictions on foreign exchange and banking transactions, and a visa and travel ban on officials associated with any entity carrying out the sanctioned transactions. None of these is expected to go into process until India takes delivery of the five S-400 systems it has paid an advance on, which are expected to begin in about 20 months and conclude by 2023.

Has India given the U.S. a fait accompli on the S-400?

India’s firm-footed response to the U.S. threat of sanctions on the Russian S-400 is in sharp contrast to its decision to “zero out” oil purchases from Iran, which were sanctioned by the U.S. last year, and denotes that while the government is prepared to diversify its energy sources, it will not be bullied on its defence security options. Given the stakes involved, the government hopes that the U.S. will put its burgeoning strategic, defence and business bilateral relationship with India above its rancour with Russia. If not, however, officials say they are prepared to ride out the storm.