Will India be sanctioned for the S-400 purchase?

Context: This topic is important for UPSE GS Paper 2.

What will be the impact if the U.S. goes ahead with punitive measures? How will the Russian missile defence shield help India tackle threats from China and Pakistan?

The story so far:

• India is preparing for a visit from Russian President Vladimir Putin for an annual bilateral meeting with Prime Minister Narendra Modi in early December, but it is the arrival of the $5.4-billion Russian long-range surface-to-air missile defence shield “S-400”, also expected next month, that is likely to generate more international headlines.
• The United States Government has made it clear that the delivery of the five S-400 systems is considered a “significant transaction” under its Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017, which could trigger sanctions against Indian officials and the Government.

What kind of sanctions?

• The CAATSA is designed to ensure that no country can increase military engagement with Iran, North Korea and Russia without facing deterrent punitive action from the U.S.
• The sanctions are unilateral, and not part of any United Nations decision, and therefore no country is bound to accept them.
• The law that was pushed through by Democrat Congress representatives was signed by President Donald Trump under some protest, as he was keen at the time on improving relations with Russia, and was hoping to broker a deal between the Koreas as well.
• Section 231 says the President shall impose no fewer than five different sanctions on any Government that enters into a significant defence or intelligence deal with the Russian Government.
• Section 235 lists 12 options, including stopping credit lines from the U.S. and international banks such as the IMF, blocking sales of licensed goods and technology, banning banks, manufacturers and suppliers, property transactions and even financial and visa sanctions on specific officials.
• However, the law empowers the President to waive sanctions or delay them if he/she certifies that the deal is not a threat to the U.S. and allies, that waiver of sanctions is in the U.S.’s “vital national security interests” or that the country being sanctioned promises to reduce its future dependence on the “adversary country”.

Has the U.S. used CAATSA before for S-400 sales?

• The U.S. has already placed sanctions on China and Turkey for the purchase of the S-400.
• In 2018, the State Department said it, would impose sanctions on the People’s Liberation Army’s Equipment Development Department, and in particular its Director, Li Shangfu, for the purchase of the S-400 system-related equipment and Sukhoi-35 combat aircraft from Russian defence exporter Rosoboronexport.
• The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the U.S. jurisdiction and a visa ban.
• In 2020, the U.S. sanctioned its NATO partner Turkey, which it had warned about CAATSA sanctions for years, besides cancelling a deal to sell Ankara F-35 jets.
• The sanctions on Turkey’s main defence procurement agency, SSB, also included a ban on licences and loans and blocking of credit and visas to SSB president Ismail Demir and other officials.
• While U.S. officials hope the sanctions and the promise of a sale of F-16 jets would stave off Turkish President Recep Erdogan’s plans to deploy S-400, a deadlock continues.

Which way is the Biden administration leaning on India?

• The Biden administration has not given any firm indication on where it leans on India’s case yet. Last month, during a visit to Delhi, U.S. Deputy Secretary of State Wendy Sherman said the U.S. had made it clear that the S-400 is “dangerous and not in anybody’s security interest”, but left the determination on sanctions after India takes delivery of the missiles to President Biden himself.
• In subsequent weeks, Congress representatives, including the Chairman of the powerful House of Representatives Foreign Affairs Committee (HFAC), Gregory Meeks, a Democrat, as well as several Republicans have called upon the Biden administration to consider a special waiver for India, given India’s importance as a defence partner, and as a strategic partner on U.S. concerns over China and in the Quad.
• If India chooses to go forward with its purchase of the S-400, that act will constitute a significant and therefore sanctionable, transaction with the Russian defence sector under Section 231 of CAATSA.
• It will also limit India’s ability to work with the U.S. on the development and procurement of sensitive military technology.
• Saudi Arabia has also reportedly negotiated with Russia for the S-400, and some experts in the U.S. feel that giving a waiver to India would be the wrong signal for others seeking to go ahead with similar deals.

What is India’s position?

• India has not backed down in the face of U.S. opposition thus far, however, and is scheduled to receive the first S-400 deliveries in December.
• In preparation for the induction, two teams of technicians from the Indian Air Force were trained on the system by the manufacturer, Almaz Antey, in Russia this year.
• After signing the deal in October 2018, during Mr Putin’s last visit to Delhi, India and Russia had protected the advance payments from triggering U.S. sanctions by ensuring a rupee-rouble transfer.

Why is the S-400 deal so important to India?

• Senior Indian officials have held firm that S-400 is very important for India’s national security considerations, especially as it faces new threats from China, Pakistan and Afghanistan, calling it a “game-changer”.
• The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
• Integrating the S-400 into the national air defence architecture will be much easier as India has a large number of legacy Russian air defence systems, a major reason India did not consider the U.S. air defence systems as a viable alternative.
• For both political as well as operational reasons, the deal is at a point of no return.
• Buying the S-400 is a way for the Indian Government to assert its ‘strategic autonomy.

Way Forward

This stated principle of Indian foreign policy wavered under pressure from the Trump administration, when India agreed to stop buying Iranian oil over the threat of sanctions in 2019, a move that caused India both financial and reputational damage. Not giving in to the U.S.’s unilateral sanctions over the S-400 would be one way to restore some of that.