Context :

• 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.

About CAATSA

• 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.

Sanction Waiver / Exit clause

• There is also and exit clause in CAATSA, 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”.

Can India be considered for the waiver

• Government officials have 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.