CAATSA: Will India get an exemption?

Russia has said it has begun delivering the S-400 missile defence systems ordered by India, though it remains unclear if it has indeed been delivered. And that’s an important distinction to make because actual and physical delivery will trigger an American legal instrument that seeks to punish Russia by scaring away its military hardware clients, with the threat of secondary sanctions.

The United States (US) has used this 2017 legal measure — Countering America’s Adversaries Through Sanctions Act (CAATSA) — only twice before. Both were over S-400 purchases and both, once again, were imposed by the administration of former President Donald Trump. The first was in 2018 and the target was China. The second one (2020) was against Turkey, a North Atlantic Treaty Organization (NATO) ally. But India is neither China, which is a US adversary, nor Turkey, a NATO ally.

India is a strategic partner in America’s power tussle with China in the Indo-Pacific region. It is also a newly minted US partner that is struggling to overcome decades of distrust and suspicion of the US — memories persist of the US Navy Taskforce 74, a portion of the US Seventh Fleet, deployed against India in the 1971 war.

The dizzying frequency of bilateral and multilateral summits, top-level visits, officials exchanges and interactions, both in-person and virtual, is of recent vintage. It dates back to a 2005 joint statement issued after a meeting between Prime Minister Manmohan Singh and President George W Bush. This meeting and, the statement that followed, spawned the civil nuclear deal, among other things, that has become the gold standard for all subsequent outcomes and developments in the relationship.

Despite the progress made since — including the Quad — the relationship remains fragile. Senators Mark Warner (Democratic) and John Cornyn (Republican), the co-chairs of the India Caucus, warned, in a letter to President Joe Biden recently, that “possible upcoming sanctions against India could reverse or slow” the progress in the relationship. The question is, actually, can the relationship survive another round of sanction(s)? The last one following Pokhran II nuclear tests in 1998 was undone finally more than a decade later in 2010.

India has a legitimate case for CAATSA exemption. Negotiations for the purchase of five S-400s started years before CAATSA was enacted. A purchase agreement was signed in 2015 and a deal worth $4.5 billion was finalised in 2018. The US tried to stop it with counter offers of its rival Terminal High Altitude Area Defense and Patriot systems. It was an offer that came too late.

But can India put something on the table to make an exemption from CAATSA more palatable for the US? India had blunted Trump’s complaints about the trade deficit by scaling up its oil and gas purchases from the US. It may want to dip into the same bag of tricks for something to take care of the S-400 affair.