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The United States of America (US) Government had published the Countering America’s Adversaries Through Sanctions Act (CAATSA) (Law) in August 2017 which authorizes the US President to impose sanctions with respect to a person which engages in a significant transaction with a person that is part of, or operates for or on behalf of, the defense or intelligence sectors of the Government of the Russian Federation, including the Main Intelligence Agency of the General Staff of the Armed Forces of the Russian Federation or the Federal Security Service of the Russian Federation. But the Law also allows the President to waive such sanctions in certain cases.

This Law was introduced owing to the rising tension between US and Russia including the alleged Russian interference in the 2016 U.S. Presidential Election, alleged Russian involvement in the Syrian civil war, etc.

India and other US allies, having trade relations with Russia, seem to have been adversely affected by the Law. Indian military uses Russian parts, hardware, supplies, maintenance help and other defence items, in particular state-of-the-art S-400 air missile defence system, for their ships, planes, etc. Moreover, India is currently in the advance stages of negotiations with Russia for five S-400 defence systems worth $ 4.5 billion (approximately). It is feared that India could face sanctions from US if it continues its defence ties and arms trade with Russia.

Owing to the fear of US sanctions, various Indian banks have recently blocked payments worth over $15 Million to Russia. As a result the entire arms trade of India with Russia has come to a halt.

Various experts have expressed concern over this move of the US and its adverse affects on India stating that India may seek waiver or exemption from these sanctions on the ground that India is reducing its dependence on Russian arms and hardware. According to a top defence official, it is also feared that the sanctions imposed on India may have a negative impact on the India-US arms trade and defence relations. Various officials and ex-officials of the US Government have commented in this regard stating that seventy per cent of the US military hardware is also Russian in origin and so US would not want to weaken its trade ties with India. But the Indian Government is yet to make any public statement in this regard.

 

Harini Daliparthy

Senior Legal Associate

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