The CAATSA And Its Implementation On Turkey, Egypt, China and India

The final parts of the second battery of Russian S-400 missile defense system.

The CAATSA was introduced by Republican Rep. Ed Royce (then-Chairman of the House Foreign Affairs Committee (HFAC)) and co-sponsored by Democratic Rep. Eliot Engel (then-Ranking Member of HFAC), Republican Rep. Kevin McCarthy (then-House Majority Leader), and Democratic Rep. Steny Hoyer (then-House Minority Whip). As a result, the legislation passed with an overwhelming majority (419-3 in the House and 98-2 in the Senate). Thereafter, Trump “grudgingly” signed the legislation, by noting the “many ways it (CAATSA) improperly encroaches on Executive power.”

On December 14 2020, the United States is imposing sanctions on the Republic of Turkey’s Presidency of Defense Industries (SSB) pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) for knowingly engaging in a significant transaction with Rosoboronexport, Russia’s main arms export entity, by procuring the S-400 surface-to-air missile system.  The sanctions include a ban on all U.S. export licenses and authorizations to SSB and an asset freeze and visa restrictions on Dr. Ismail Demir, SSB’s president, and other SSB officers.

US Position on Turkish S-400 Purchase

The United States made clear to Turkey at the highest levels and on numerous occasions that its purchase of the S-400 system would endanger the security of U.S. military technology and personnel and provide substantial funds to Russia’s defense sector, as well as Russian access to the Turkish armed forces and defense industry.  Turkey nevertheless decided to move ahead with the procurement and testing of the S-400, despite the availability of alternative, NATO-interoperable systems to meet its defense requirements.  This decision resulted in Turkey’s suspension and pending removal from the global F-35 Joint Strike Fighter partnership.

Today’s action sends a clear signal that the United States will fully implement CAATSA Section 231 and will not tolerate significant transactions with Russia’s defense and intelligence sectors.  I also urge Turkey to resolve the S-400 problem immediately in coordination with the United States.  Turkey is a valued Ally and an important regional security partner for the United States, and we seek to continue our decades-long history of productive defense-sector cooperation by removing the obstacle of Turkey’s S-400 possession as soon as possible.

Countries Operating the S-400

CountryDate of ContractDate of First DeliverySanctioned under CAATSA
BelarusAugust 2007 (requested)June 2016No (before CAATSA)
Algeria20142015No (before CAATSA)
ChinaMarch 2014January 2018Yes (on September 20, 2018)
TurkeyDecember 2017July 2019Yes (on December 15, 2020)
IndiaOctober 2018September 2021 (expected)

The sanctions, which were issued under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), target Savunma Sanayii Başkanlığı (SSB) (Turkey’s Presidency of Defense Industries) and certain of its principal officers. SSB is a public institution affiliated with the Presidency of the Republic of Turkey to manage the Turkish defense industry and related procurements.

Sanctions on Turkish SSB

In particular, SSB was added to the US Department of Treasury’s new Non-SDN Menu-Based Sanctions List (NS-MBS List) and subjected to the following CAATSA sanctions:

  1. a prohibition on granting specific US export licenses and authorizations (including from DDTC, BIS, or DOE) for any goods or technology transferred to SSB;
  2. a prohibition on loans or credits by US financial institutions to SSB totaling more than US$10 million in any 12-month period;
  3. a ban on US Export-Import Bank assistance for exports to SSB; and
  4. a requirement for the United States to oppose loans benefitting SSB by international financial institutions.

We are still waiting on guidance to understand if the restrictions will also apply to any of SSB’s nine different subsidiaries that operate in and outside Turkey and that include a number of prominent defense, aerospace, and technology companies. It is also unclear what impact the sanctions may have on existing licenses for the export of US-origin goods to SSB.

In addition, the following four officers of SSB were added to the US Department of Treasury List of Specially Designated Nationals and Blocked Persons (SDN List), meaning all property and interests in property of such individuals (or any entities they have a 50 percent or greater interest in) in the United States is blocked and US persons are generally prohibited from engaging in transactions involving such persons:

  1. Dr. Ismail Demir, president of SSB;
  2. Faruk Yigit, SSB’s vice president of SSB;
  3. Serhat Gencoglu, Head of SSB’s Department of Air Defense and Space; and
  4. Mustafa Alper Deniz, Program Manager for SSB’s Regional Air Defense Systems Directorate.

The officers are also subject to certain visa restrictions prohibiting their travel to the United States.

Egypt Will Face CAATSA

Egypt has reportedly began taking delivery of the first five of at least 20 Su-35SE “Super Flankers” it ordered from Moscow.

The delivery of this first batch seems to confirm that Cairo pushed ahead with its reported $2 billion deal for these new warplanes despite warnings from the United States. 

Last November, U.S. Secretary of State Mike Pompeo and Secretary of Defense Mark Esper tried to convince Egyptian Defense Minister Mohamed Ahmed Zaki Mohamed to cancel the deal in a letter. 

“Major new arms deals with Russia would – at a minimum – complicate future U.S. defense transactions with and security assistance to Egypt,” the letter reportedly warned

The U.S. provides Egypt with approximately $1.3 billion in military aid each year. Much of the Egyptian military arsenal consists of American hardware: everything from F-16 Fighting Falcons fighter jets to AH-64 Apache helicopter gunships and M1A1 Abrams main battle tanks. 

In 2017, the Countering America’s Adversaries Through Sanctions Act (CAATSA) became federal law. Under that law, any country that makes a “significant transaction” with Russia’s defense sector should face U.S. sanctions. The estimated $2 billion Su-35 deal most certainly constitutes a “significant transaction.”

Given these risks, it’s questionable why Egypt pushed ahead with this procurement. 

Egypt has already spent billions of dollars on advanced military hardware from both Russia and France in recent years. It purchased two Mistral-class amphibious assault ships and a fleet of advanced Rafale multirole fighter jets from France. 

Read More   SY-400/DF-21A/BP12A Short-range Ballistic Missile

From Russia, Egypt acquired the most Russian-made military hardware in the 2010s than it has since the 1970s. Acquisitions to date include a fleet of MiG-29M/M2 Fulcrums, Ka-52 attack helicopters, and advanced S-300 air defense missile systems. Cairo ordered these weapons before CAATSA became law.

The United States could impose sanctions on Egypt and block it from future military sales if it goes ahead with a purchase of Russian warplanes, a U.S. official said on November 19 2020.

“Cairo is clearly aware of this. Its not new news.”

Other U.S allies in the region are also exploring major Russian purchases, including Saudi Arabia and Qatar, which have both expressed interest in the S-400, and the United Arab Emirates which signed an outline agreement for the Su-35 in 2017.

India Inviting CAATSA Sanctions

New Delhi appears determined to proceed with the $5.2-billion deal, having concluded that the S-400 was cost-effective and will be efficient in meeting India’s defense needs as compared to rival systems. The Indian government has stressed that negotiations were already underway before CAATSA came into being in 2017, with the Inter-governmental Agreement (IGA) for its procurement having been signed in 2016 during the 17th India-Russia summit in Goa. The contract for its supply was concluded in 2018, and in recent years, India and Russia have signed a number of additional defence deals across domains, including guided missile frigates, T-90 battle tanks, and lease of a nuclear-powered attack submarine.

On the other hand, it is apparent that US concerns go beyond just CAATSA and Russian arms sales. The presence of advanced systems such as the S-400 among US allies will clearly impede certain technology transfers and joint operations, as evidenced by the immediate suspension of F-35 deliveries to NATO ally Turkey, even before sanctions under CAATSA came into force. Turkey has also been removed from the multinational F-35 development and production programme. In the US-India case, where the countries are not formal allies, the S-400 will nevertheless place constraints on some contours of what the US envisions for the future of the US-India defence relationship.

India’s Imports of Major Weapons from Key Suppliers

“Russia was the largest supplier to India in 2010-14 and 2015-19, but deliveries fell by 47 % and its share of total Indian arms imports went from 72% to 56 %,” it said. The US emerged as India’s second-largest arms supplier during 2010-14 as security ties between the two sides progressed into a strategic partnership. “However, in 2015-19 India continued with its policy of supplier diversification, and imports of arms from the USA were 51 % lower than in 2010-14,” the SIPRI report said.

In contrast, arms imports from Israel and France increased, by 175% and 715% respectively, making them the second- and third-largest suppliers during 2015-19.

The S-400 is not the only Indian procurement that threatens to provoke CAATSA sanctions. Between 2016 and 2019, the Government of India concluded two agreements with Russia, totalling approximately $1.5 billion, for the supply and local production of four Project 11356 frigates for the Indian Navy.

In July 2020, the Indian Ministry of Defence approved some $2.4 billion for the Indian Air Force to procure 21 MiG-29 and 12 Su-30 fighters from Russia — the former, supplied directly and the latter, assembled in India. In January 2021, Indian government sources indicated that plans to proceed to contract were imminent. Earlier that same month, the Indian Army Chief, General MM Naravane, confirmed that all issues relating to a delayed procurement and domestic production of Russian AK-203 assault rifles had been ironed out and the approximately $600 million contract would be inked shortly.

Sr. noYear of deal finalisationPlatform/EquipmentNumber BoughtTo be/already inducted inReported cost (rounded in US$ billion)
12008Super Hercules C-130J military transport planes6Indian Air Force1
22009P8I Poseidon Long Range Maritime Patrol and Anti-Submarine aircraft8Indian Navy2.1
32010AGM-84L Harpoon Block II missiles24Indian Air Force0.170
42011C-17 Globemaster-III transport aircraft10Indian Air Force4.1
52011MK-54 all-up-round lightweight torpedoes32Indian Navy0.086
62012Super Hercules C-130J military transport planes6Indian Air Force1
72012AGM-84L Harpoon Block II missiles21Indian Air Force0.200
82015AH-64E Apache helicopters22Indian Air Force2.1
92015CH-47F (I) Chinook helicopters15Indian Air Force0.900
102016M777 Howitzer guns145Indian Army0.732
112016Super Hercules C-130J military transport planes1Indian Air Force0.134
122016P8I Poseidon Long Range Maritime Patrol and Anti-Submarine aircraft4Indian Navy1.1
132019Sig Sauer Assault Rifles72,400Indian Army0.090
142020AH-64E Apache helicopters6Indian Army0.930
152020MH-60 Romeo Seahawk helicopters24Indian Navy2.1
Indian Arms Import From USA. Source: Kashish Parpiani, “India-US Defence Trade Continuity Under Trump“, The Observer Research Foundation, July 02, 2020.

One may argue that with Trump’s departure, CAATSA has served its purpose as a means by which Capitol Hill sought to guard US foreign policy against Trumpian disruptions. However, the spectre of US sanctions under CAATSA is expected to persist, in view of it fitting squarely with the aims of the Joe Biden administration.

During the campaign, Biden vowed to address “rabid partisanship” that has gripped Washington. In doing so, he often invoked his experience as US senator, to reminisce the sense of “civility” to get “things done” — even when Republicans and Democrats “didn’t agree on much of anything.”[34] With Biden’s commitment to govern with consensus from across the aisle, the chances are slim that his administration will jettison a landmark bipartisan undertaking like CAATSA. Furthermore, CAATSA’s impact on US foreign policy will remain relevant from the standpoint of Biden’s plan to either pursue continuity on certain Trump policies or employ CAATSA as competitive leverage to pursue his agenda of reversing course on Trump’s foreign policy.

An S-400 Triumf launch vehicle.

The spectre of US sanctions on India did not disappear, as the Congressional action did not rest the authority to grant waivers with former US Secretary of State Mike Pompeo – another prominent administration official supportive of waivers for partners. Instead, the decision was left with the office of the US President.

What will the Biden Administration Do?

Imposing sanctions on India would not only complicate this deepening relationship—one that Secretary of State Blinken recently characterized as a “bipartisan success story.” It could also jeopardize U.S. interests in the region given that China constitutes a key priority for the Biden Administration and India’s prominence in Washington’s strategic calculus in this domain.  

“There is a narrow chance India can avoid sanctions, presuming the S-400 purchase is completed. At the moment, it’s a good bet that sanctions will be applied against India,” Richard Rossow, a specialist at the Center for Strategic and International Studies in Washington, said.

But the outcome could depend on how India-U.S. defense cooperation progresses, he said, adding that India had been working with Washington on security in Asia more than ever before and this could be a mitigating factor.

Washington has told New Delhi that if India acquires the S-400 it would affect how its systems interact with U.S. military equipment that India now has and would jeopardise future arms transfers such as high-end fighter planes and armed drones, according to the people aware of the matter.

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