For four years now, the Indo-Russian deal for five regiments of the S-400 anti-aircraft missile system has constantly made the news. The deal, worth more than USD 5 billion, will make India the third foreign buyer of the system after China and Turkey. In short, S-400 ‘Triumph’ is a Russian long-and medium-range anti-aircraft missile system, designed to destroy all modern and promising means of aerospace attack built upon the legacy of S-300, S-200 and other versions which have been in deployment for a long time in diverse conditions. At the same time, the S-400 system costs around half of its western alternatives.
Since the outlines of the deal first came to light, the deal has worried both China and the United States for different reasons. Whereas China sees the deal as the embodiment of close India-Russia defence ties, Washington sees this deal through its inability to choke Russia through sanctions and the loss of market share for its own defence industry.
The story doesn’t end here. The possibility of invoking the CAATSA (On Countering America’s Enemies Through Sanctions) against India due to defence procurement deals with Russia, is a matter of concern for other prospective buyers like Saudi Arabia, Vietnam, and Indonesia which the US has long eyed as markets for its own defence offerings. However, the Indian case is unlike the Chinese and Turkish cases (both sanctioned for their S-400 deal) for several reasons because the US is envisaging New Delhi as a potential ally to counter China in the Indo-Pacific. Now, with the US withdrawing from Afghanistan and the security situation in South Asia in a flux, it will be imperative for the US to avoid alienating India who now stands as the sole player in subcontinental geopolitics to challenge Chinese hegemony.
What is CAATSA and why it matters?
CAATSA, signed by former US President Donald Trump in 2017, enables Washington to impose sanctions against companies, organizations, and individuals from any nation for conducting ‘substantial’ transactions with Russian defence sector enterprises. CAATSA recognises sanctions in 12 categories, at least 5 of which must be imposed when invoking the act. Some of these sanctions involve blocking loans from the US and international financial institutions and banning any procurement of defence equipment from the US by the sanctioned party, under both the foreign military sales and strategic partnership models.
An often-relayed message is that CAATSA sanctions are not designed to be punitive against partners and allies but are designed to impose costs on Russia in response to activities deemed hostile by the US. This gives the impression that the imposition of CAATSA would simply punish Russia, however, geopolitics in the realm of national security requirements make defence deals a much more convoluted reality.
There has been a widely held acceptance in Russian political circles that India is going ahead with the S-400 procurement despite the numerous American attempts to lure India away, either by CAATSA related pressures or by offering alternative defence systems to India. For Moscow, this shows New Delhi’s commitment to a strong relationship between the two nations. This re-strengthening of ties and commitment has become increasingly important for Moscow as its defence trade with China decreased since 2018 (after allegations by Russia about Chinese activities related to reverse-engineering of Russian proprietary technologies surfaced).
In recent years, there has been a narrative floated in Chinese and Pakistani media, about India moving away from its cold war era relations and of the Indian government being ‘pro-American’, which should make Moscow re-evaluate ties with New Delhi. To a certain extent, a lull observed between India and Russia for a decade between 2005-2015 gives credentials to this narrative, making way for insecurities between the two long-standing strong defence partners. For Russia, beyond securing a guarantee of New Delhi not falling gradually into Washington’s orbit in field of defence trade, the S-400 deal provides a boost to the Russian defence industry which has seen increasing competition in recent years from emerging competitors, especially China.
Moreover, it must be noted that procurement of such systems is not a short-term engagement, as such platforms are supposed to stand for decades on top of which newer versions can be built upon or upgraded. This is where the ‘generational opportunity‘ debate from US’ expert circles come into the picture which denotes the opportunity to penetrate any market through such platforms as a once in a generation opportunity
US’ CAATSA conundrum
According to some experts, the United States stands in a Catch-22 situation. It is not a question of ‘if’ CAATSA would be applied or not (as it gets applied the moment the clause of ‘significant transaction’ is satisfied). The questions are whether the waivers will be given, and if not, then which of the 12 sanctions will be applied.
There have been indications that the US has been trying to assess options to bypass the sanction clauses and provide a waiver to India under the modified waiver clauses introduced into the legislation in 2018. One of the clauses that can be invoked comes under the national security exception, which considers the waiver to be in the US’ national security interests. Another clause considers that the government with primary jurisdiction over the person (the Government of India in this case) is cooperating with the US government on other security matters that are critical to American strategic interests.
It is not just India that is waiting for the fog to clear on waivers and sanctions; other prospective buyers are waiting to see if the US will impose sanctions without considering the newly emerging geopolitical landscape. A hard-line approach towards the application of CAATSA will certainly put pressure on the likes of Vietnam and Saudi Arabia to make a hard choice between US and Russia for defence imports, whereas a milder approach might increase hopes for avoiding sanctions through diplomatic efforts with Washington while negotiating with Moscow for the defence deals.
The deal with Saudi Arabia will be especially important as it might shape how the US and Russia will be perceived in the Persian Gulf in terms of having the capability to be a security provider in the coming future. Although former president Trump adopted a softer approach towards the Khashoggi murder case in 2018, President Joe Biden has frozen the sale of weapons to Saudi Arabia, which included a potential sale of the THAAD missile system. Saudi Arabia might now use the Russian S-400 system as leverage over the US, as losing the Saudi market for defence exports will be a substantial blow for the US defence industry. Keeping in mind the emerging volatile situation in Afghanistan as well, weakening of relations with Gulf nations might cut off the US from influence in the wider West Asian region while Russia makes a return to South Asia after having carved an influential space in West Asian geopolitics by saving President Assad’s regime in Syria.
What lies ahead for India and the S-400 deal?
Unlike Turkey, which is a NATO member with a huge Western defence technology base, the Indian defence base overwhelmingly comprises of Russian and Soviet equipment. India has several joint projects with Russia like the BrahMos hypersonic missile and the assembly of T-90 tanks in India. Even if recent Indian diversification plans are taken into consideration, a significant decrease in India’s reliance on Russian equipment cannot be imagined in upcoming years. Like the cold war era, India and Russia have switched to settlement in national currencies due to the US blocking payment possibilities in dollars. This not only fits with ongoing Russian plans for de-dollarization but also helps India to fit into the wider narrative of a multipolar world and shield itself against any aggressive US policies in future.
Russia is looking towards delivering the first batch of the S-400 system by the end of this year. With unclarity around the sanctions and waivers, India and Russia will want to investigate future ideas for defence cooperation. Concerning a recent visit of Russian Foreign Minister Sergey Lavrov to New Delhi, and his statement highlighting confidence in terms of the S-400 deal, the Indian experts picked up his comment on deepening military-technical cooperation within the framework of the ‘Make in India’ program. According to this view, production of Indian air defence systems on Indian territory through a joint initiative can be a possible way of overcoming sanctions for Indo-Russian cooperation. The delivery of the S-400 systems to India in the coming months will surely be a much-celebrated event, how China and the US react, will have to be waited for. Sanctions or not, in any case, the Indo-Russian defence relationship is bound to strengthen after the S-400 procurement.
The question remains whether the increasingly evident importance for US of keeping warm ties with India will lead to waivers from sanctions. India too on its part will be wary now more than ever as the security situation in South Asian region will remain in flux for some time to come as Taliban takes over and engages with China and Pakistan. Any souring of India-US ties is bound to negatively affect both nations’ interests especially in areas both hope to engage for strategic hedging against China.
