SANCTIONS UNDER CAATSA VIJAYALAKSHMI RAJU BASICS OF LAW Fri, Oct 18, 2019, at ,11:24 AM On a day when External Affairs Minister S. Jaishankar said that he was “reasonably convinced” of influencing the US to accept India’s decision on the purchase of the Russian S-400 missile defense system, US officials warned that any such deal may risk sanctions. India had agreed to buy the surface-to-air missile system from Russia in 2018 for about $5.2 billion, risking sanctions under the 2017 US CAATSA law. Sanctions could kick in when the first payment for the equipment is made unless the US president grants a waiver. COUNTERING AMERICA’S ADVERSARIES The Countering America’s Adversaries Through Sanctions Act (CAATSA) is a US federal law that imposed sanctions on Iran, North Korea and Russia. It includes sanctions against countries that engage in significant transactions with Russia’s defense and intelligence sectors. The Act empowers the US president to impose at least five of the 12 listed sanctions on persons engaged in a “significant transaction” with Russian defense and intelligence sectors. SANCTIONS IMPOSED Section 231 of CAATSA does not specifically identify any particular sanction. It merely requires the president to “impose five or more of the sanctions described in Section 235 (of CAATSA)”. That section lists 12 types of sanctions. Of these, 10 will have very little, or no, impact on India’s current relations with either Russia or the US. Some of these are… * prohibition on loans to the sanctioned person * prohibition of export-import bank assistance for exports to sanctioned persons * prohibition on the US government to procure goods or services from the sanctioned person * denial of visas to persons closely associated with the sanctioned person None of these is of any material consequence. There are only two sanctions that may impact either Indo-Russian relations or Indo-US ties. The first of these, which is likely to have an impact on Indo-Russian relations, is the “prohibition of banking transactions”. Under this, the treasury secretary would prohibit the opening, and prohibit or impose strict conditions on maintaining, in the US of correspondent accounts or payable-through accounts of financial institutions engaged in the transfer of funds from the sanctioned person to the Russian defense sector. This would mean difficulties for India in making payments in US dollars to Rosoboronexport for the purchase of the S-400 systems. The second sanction will have far greater consequences, not for Indo-Russian relations, but for Indo-US relations. And that is the “export sanction”, which has the potential to completely derail the Indo-US strategic and defense partnership, as it will deny the license for, and export of, any items controlled by the US to the sanctioned person under... * the Export Administration Act (EAA) (all dual-use high technology goods and technology) * the Arms Export Control Act (AECA) (all defense-related items) * the Atomic Energy Act (AEA) (all nuclear-related items) * All other items from the US requiring prior review and approval of the US government.