Maj Gen P K Mallick, VSM (Retd)
CAATSA
U.S. congress’s enactment of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which President Trump signed into law in August 2017. Sections 231 and 235 of the law struck at the heart of the Indo U.S. strategic partnership. Section 231 requires that the president impose sanctions on any entity that “engages in a significant transaction with . . . the defense or intelligence sectors of the Government of the Russian Federation”. Section 235 describes the sanctions that may be imposed, which include, but are not limited to, prohibiting “any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the sanctioned person has any interest” and forbidding “any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person.”
New Delhi has a long history with Moscow, going back to the Cold War days. India became dependent on the Soviet Union only after its requests for advanced military equipment had been turned down by the West. India’s reliance on Russia for technical assistance with its strategic weapons programs will likely persist for some time to come. About 65% of our defence equipments are of Russian origin.
India aims to negotiate the purchase of at least five complete Russian S-400 systems with a price tag of close to $6 billion. The S-400 is capable of destroying jets, missiles and unmanned aerial vehicles at a range of 400km. For months, the two sides have been aiming to reach an agreement on the deal before Russian President Vladimir Putin’s visit to India, planned for early October for annual summit talks. The $6 billion deal puts India in the cross hairs of CAATSA. As Brahma Chellaney writes in Nikkei Asian Review, “America has overtaken Russia in recent years as the top arms seller to New Delhi, and also emerged as a source of oil and gas supply to India. But these evolving ties cannot at this stage replace India's links with Russia and Iran. The U.S. has basically transferred defensive military systems, while Russia has sold India offensive weapons, including a nuclear-powered submarine and an aircraft carrier.”
Russian weapons in Indian hands do not pose any direct threat to America’s national security interests. There is no doubt that the S-400 system is the best of its kind in the world and that the combination of the Patriot surface-to-air missiles and the Theatre High-Altitude Air Defence system the Americans have offered is not a match
The secondary sanctions rely on third parties to target Russia’s defence industry, stifle its sale of equipment and effect a change in Russian behaviour. If the contract passes through, it would deal a major blow to the U.S. target of making the punitive measures against Russia work. Considering the nature of the US-India strategic partnership and India’s pivotal role in U.S. Indo-Pacific strategy, Secretary of Defence Mattis took the lead in urging Congress to exempt a small set of U.S. partners—in particular, India, Indonesia, and Vietnam—from the sanctions obligations associated with CAATSA. But it seems Secretary of State is not on the same page. The U.S. Congress last July permitted Trump to take a decision on waiver application for allies such as India, Indonesia and Vietnam if the administration can certify that a country is reducing defence equipment imports from Russia, expanding cooperation with the U.S. in defence deals and the carve-out is in keeping with U.S. security interests. The move was largely interpreted as an exception meant for India that had clarified its intent of going ahead with the S-400 deal despite the threat of sanctions.
It now emerges that this was a premature and even misleading conclusion. Randall Schriver, the Pentagon’s assistant secretary of defence for Asian and Pacific Security Affairs, said in Washington that an impression “that we are going to completely protect the India relationship, insulate India from any fallout from this legislation no matter what they do… is a bit misleading. We would still have very significant concerns if India pursued major new platforms and systems (from Russia).”
Defence Deals With Russia. Moscow has been New Delhi’s largest defense supplier since the 1960s, accounting for 68 percent of India’s arms imports from 2012 to 2016, according to the Stockholm International Peace Research Institute. In addition to New Delhi’s intended procurement of five regiments of Russian-made S-400 Triumf air defense systems (NATO reporting name: SA-21 Growler) for the five S-400 regiments is estimated at around $5.5 billion. There are other defence deals on the offing. Some of them are expected to be signed during a summit meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin scheduled for October 5.
India inked an Inter-Governmental Agreement (IGA) with Russia for the four frigates in 2016. The navy currently operates six stealth frigates — three Talwar class and three Teg class — bought from Russia and inducted between 2003 and 2013. India and Russia are expected to finalize a deal for four more Krivak/Talwar class stealth frigates for the Indian Navy. India has already cleared way for $2.2-billion frigates deal with Russia. Two of the warships will be constructed at the Yantar Shipyard in Kaliningrad and the remaining two at the Goa Shipyard Limited (GSL). After the contract is signed, Russia will take four years to deliver the two warships. We will take six years to build the first warship and one more year to deliver the second. The new Grigorovich-class ‘Project 1135.6’ frigates will be powered by gas turbine engines to be supplied by Ukrainian firm Ukroboronprom’s Gas Turbine Research & Production Complex Zorya-Mashproekt. Several Russian delegations have visited GSL and are satisfied with the facilities there.
Russia rarely imposes the same stringent conditions that Washington does, especially on end-user controls and technology co-production. India has, in fact, diversified its weapons import sources — the United States and Israel are now more important suppliers — but the chances of abandoning Russia in the near future seem quite low.
Government of India may clear purchase of two more Airborne Warning And Control Systems (AWACS) for around $800 million. Indian Air Force uses IL-76 aircraft mounted with Phalcon AWACS. This project has been hanging fire since the first three AWACs were inducted by the IAF in 2009-2011 under a $1.1 billion deal inked by India, Israel and Russia in 2004.
Russia has sent a joint submarine design and construction proposal to build on the technology transfer acquired while building the nuclear fleet, and promises to drastically reduce the cost of Navy’s next-generation vessel plan. The proposal, offers an alternative to an upcoming $10 billion P 75I tender for six new diesel electric submarines that the Navy requires. These are to be fitted with an Air Independent Propulsion (AIP) system that significantly increases their ability to stay underwater. It is believed that the Russian side has offered a transfer of all intellectual property for the design and prototype construction. This will mean that there are also no limits to the number of submarines that can be built under the project. This is a government-to government deal for joint design with the Advanced Technology Vessel Project (ATVP).
The Government of India has kept up the pressure on our relationship with Russia. Immediately after the 2+2 dialogue,speaking at a conference titled 'India-Russia in the 21st Century: Enhancing the Special Privileged Strategic Partnership' on September 12 Union Minister Dharmendra Pradhan said, "I believe that our time-tested relationship has no expiry date. Russia will always be a priority in India's foreign and energy policy and both our countries will remain as a role model for global communities." He hailed Russia as India's largest investment destination in the oil and gas sector. He said "Prime Minister Modi and Russian President Vladimir Putin share a deep friendship and respect for each other which is beyond the business and diplomatic relations. Today Russia is the closest friend."
"Our energy relations were never as strong as they have become in the last couple of years. Our engagement in the hydrocarbon sector, including some major investments, has become one of the key pillars of our bilateral relations. India and Russia have deeply strengthened their hydrocarbon engagement and we have also built an 'Energy Bridge' between our two countries. Soviet technology helped us in oil and gas since 1960s. Striking oil at Bombay High, India's biggest oil and gas field, was also due to soviet experts," the minister added.
"Russia is one of the largest producers of oil and natural gas in the world and it can become an important source to fulfill India's requirements. India has embarked on the path of becoming a gas-based economy. Russian supplies will help us in meeting the objectives of price stability and energy security. Our oil and gas PSUs are continuing to explore their participation in more oil and gas projects in Russia," he underscored.
External Affairs Minister Ms Sushma Swaraj went on a two day visit to Russia to discuss issues of bilateral cooperation of the two nations. Sushma Swaraj’s meeting comes ahead of Russian President Vladimir Putin upcoming visit to India this year. The meeting was held in the capital city of Moscow from 13-14 September. The 23rd India-Russia Inter-Governmental Commission on Technical & Economic Cooperation (IRIGC-TEC) was chaired by Yuri Borisov, Deputy Prime Minister of the Russian Federation and Sushma Swaraj, Minister of External Affairs. IRIGC-TC is standing body which conducts annual meeting to review the ongoing activities in areas of trade and investment, culture, science and technology. She also reviewed bilateral cooperation in various fields which would provide means of directions on the interest of both the countries.
Military Exercises
For more than a decade there has been the growing cooperation in military exercises. The Yudh Abhas exercise involving the two armies since 2004 has been a major success story. Likewise, the naval exercises in Malabar, being held bilaterally since 1992, has expanded to include the the Japanese navy since 2014.
The two countries hold elaborate navy-to-navy maneuvers, air exercises and even drills involving Special Forces, but war games involving all three arms represent a scaling up of defense cooperation. This is now being planned. “We do more military exercises with India than with any other country in the world,” said Alice Wells, deputy assistant secretary for South and Central Asian affairs, in a recent news conference.
Indian Armed Forces specially Indian Navy has been participating in exercises like Malabar with U.S. Navy and others since decade back. The Indian Navy and the U.S. Navy, that have one of the most robust and intensive wargames on a regular basis, are far more comfortable with the agreement. In almost all the bilateral or multilateral naval exercises, Indian ships, carriers and submarines have accepted the US’ CENTRIXS (Comprehensive Enterprise for Regional Information Exchange System) platform. These “talk boxes” are installed for the duration of the wargames. It has worked well. As long as we do not intend to go to war along with USA as an ally this process should suffice.
No recent event illustrated India's diplomatic balancing act more than the August 24 military manoeuvre 'Exercise Peace Mission', between all eight members of the Shanghai Cooperation Organisation (SCO), including the armies of India, China, Pakistan and Russia, in Chebarkul, Central Russia. One an old strategic partner, the other a strategic challenge and the third, an old foe. All three of them have reasons to make common cause against the US.
Nuclear Issues
India has been seeking entry into the 48-member elite nuclear club, which controls nuclear trade, but China has repeatedly stonewalled its bid. While India, which is backed by the U.S. and a number of western countries has garnered the support of a majority of the group's members, China has stuck to its stand that new members should sign the Nuclear Non-Proliferation Treaty (NPT), making India's entry difficult as the group is guided by the consensus principle. India is not a signatory to the NPT.
The waiver from the Nuclear Suppliers Group (NSG) in September 2008 allowed India to access civilian nuclear technology and fuel from other countries. India is the only known country with nuclear weapons which is not a party to the Non-Proliferation Treaty (NPT) but is still allowed to carry out nuclear commerce with the rest of the world. Former U.S. president George W Bush had signed the legislation on the Indo-U.S. nuclear deal, approved by the U.S. Congress, into law on 8 October, 2008. This gave a massive boost to India’s quest for nuclear power.
As of 2016, India has signed civil nuclear agreements with 14 countries: Argentina, Australia, Canada, Czech Republic, France, Japan, Kazakhstan, Mongolia, Namibia, Russia, South Korea, the United Kingdom, the United States, and Vietnam.
The Indo-U.S. nuclear deal had its attached strings. The nuclear agreement with USA led to India issuing a Letter of Intent for purchasing 10,000 MW from the USA. These reactors were to be supplied by General Electric and Westinghouse Electric, a US-based unit of Toshiba. Though General Electric and Westinghouse Electric were not technically world leaders in nuclear technology. However Westinghouse's parent company Toshiba decided in 2017 to withdraw from the construction of nuclear power plants, following financial difficulties filed for bankruptcy, leaving the proposed agreement in doubt. U.S. Secretary of Energy Rick Perry during a news conference held in New Delhi, on April 17, 2018 said : Westinghouse Electric, which filed for bankruptcy last year, is now “lean and mean and ready to get to work” on its projects to build nuclear reactors in India.
Alice Wells, the Principal Deputy Assistant Secretary of State for South and Central Asia, told a Washington audience that the nuclear deal with India would finally see the light of the day with the approaching of its 10th anniversary. "With Westinghouse coming out of bankruptcy, we now have an opportunity to cross the finish line to really culminate in what was this historic process that began a decade ago to be able to have one of our premier companies provide in some of the safest and cleanest fuel that will benefit, tens of millions of Indian citizens."
While there was uncertainty about U.S. companies Russia and France quickly moved in. France was the first country to sign a civilian nuclear agreement with India, on 30 September 2008. During the December 2010 visit of the French President Nicolas Sarkozy to India, framework agreements were signed for the setting up two third-generation EPR reactors of 1650 MW each at Jaitapur, Maharashtra by the French company Areva SA. However, Areva SA of France is fighting an uphill battle to recover from stagnancy and is starving for fresh contracts. Areva has not won a single contract for overseas construction of a nuclear power plant since 2007. Russia is now so far ahead that Areva simply cannot catch up. Areva, entrusted with setting up the Jaitapur plant, got into near bankruptcy, and the French energy major EDF took over the reactor unit. Following that, EDF was forced to make a fresh proposal to NPCIL last year; negotiations are still going on.
Vacuum created by the bankruptcy of Westinghouse was filled by the Russian-Indian cooperation. This came as a blow to both the United States, which had long sought to sell its reactors to India under the administrations of Presidents George W. Bush and Barack Obama, and Japan, which had placed similar hope on Westinghouse.
Russia currently has contracts to build 34 reactors in 13 countries, with an estimated total value of $300 billion. When nuclear fuel supplies and technical cooperation are included, Russia’s state-run Rosatom State Atomic Energy Corporation is doing business in as many as 20 countries.
Russia looks set to dominate the business of exporting nuclear power plants worldwide, as its share of the market has now reached 60 percent after concluding contracts with countries like India, Turkey, Egypt and Hungary for the construction of new plants and technical cooperation. The Russian plants are priced 20 percent to 50 percent lower than their Western counterparts to start with, and Moscow pledges “full support” for projects undertaken by Rosatom.
After successful commissioning of Kudankulam units 1 & 2, an agreement was made with Russia in June 2017 for the units 5 & 6 (2 x 1000 MW) with an estimated cost of INR 250 million (3.85 million US$) per MW. Earlier, India had also entered in to an agreement with Russia in October 2016 for the units 3 & 4 (2 x 1000 MW) with an estimated cost of INR 200 million (3.08 million US$) per MW.
Following the March 2011 Fukushima nuclear disaster, Germany has permanently shut down eight of its 17 reactors and pledged to close the rest by the end of 2022. Italy voted overwhelmingly to keep their country non-nuclear. Switzerland and Spain have banned the construction of new reactors. Japan’s prime minister has called for a dramatic reduction in Japan’s reliance on nuclear power. Taiwan’s President did the same. Globally, more nuclear power reactors have closed than opened in recent years.
In June 2016, the U.S. and India agreed to build six AP-1000 in India as part of civil nuclear deal signed by both countries. Negotiations are being conducted with the commercial contract. The proposed locations for the six-unit nuclear power plant is the coastal district of Gujarat; however, the site may be moved to the southeastern state of Andhra Pradesh, due to opposition from the local community.
Since Japan's Fukushima nuclear tragedy in 2011 which was followed by an earthquake and tsunami, India has been witnessing stiff opposition against nuclear power plants. People around proposed Indian nuclear power plant sites have launched protests, raising questions about atomic energy as a clean and safe alternative to fossil fuels. There have been mass protests against the French-backed 9,900 MW Jaitapur Nuclear Power Project in Maharashtra and the Russian-backed 2,000 MW Kudankulam Nuclear Power Plant in Tamil Nadu. The state government of West Bengal state has also refused permission to a proposed 6,000 MW facility near the town of Haripur that intended to host six Russian reactors.
India's nuclear liability law has become a major bone of contention. This law gives accident victims the right to seek damages from plant suppliers in the event of a mishap. Foreign players like General Electric and Westinghouse Electric, a US-based unit of Toshiba, with companies asking for further clarification on compensation liability for private operators. India has been victim of the world's worst industrial disaster in Bhopal gas tragedy in 2004.
With this backdrop it will be interesting to see how the nuclear projects with USA will progress. Will there be similar pressure be put to waive off India’s nuclear liability law. As India has bent to sign COMCOSA will U.S. abide by India’s law. Will there be effects of sanctions like CATSA on Indo U.S. nuclear projects.
After Two + Two dialogue both the countries also decided to work together towards India's entry to the Nuclear Suppliers Group (NSG). "We agreed on working together towards entry of India in the Nuclear Suppliers Group (NSG)," said Swaraj. However, India though has made this a prestige issue, the waiver gives almost everything that India wants.
The support to India's admission to the NSG has no operational element in it. A sense of resignation is evident in the section on the civil nuclear energy partnership and the projected establishment of six nuclear power plants in India. The various hurdles to nuclear trade between the U.S. and India, such as the Liability Act have not been mentioned in the joint statement.
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