A CAATSA Waiver for India: What’s Really at Stake

Chet Lee

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Over the last two decades, China’s military modernization and expansion have placed it on the brink of becoming one of the most dominant forces in the world. In particular, the People’s Liberation Army Navy (PLAN), now the numerically largest in the world, has been a focal point for President Xi Jinping and the Chinese Communist Party – and his efforts have been worthwhile. Already having employed coercive measures in much of the South China Sea, it is now only a matter of time until the CCP uses its PLAN to do the same in the Indian Ocean, the next stage on which it hopes to upset the international order.

As of 2020, the PLAN has amassed 355 ships, 145 of which are major combatants, six nuclear-powered ballistic missile submarines, six nuclear-powered attack submarines, and 46 diesel-powered attack submarines. According to the Department of Defense’s latest report to Congress on China, in the near term, the PLAN will cement its global power projection capabilities through the ability to conduct long-range land strikes with cruise missiles fired from submarines and surface ships.

Beijing is buying its way to being able to sustain forces indefinitely in the Indian Ocean. China has invested in port facilities in Cambodia, Myanmar, Bangladesh, Sri Lanka, the Maldives, Pakistan, Djibouti, Kenya, Tanzania, the United Arab Emirates, and Australia. The PLAN has increasingly deployed warships to the Indian Ocean, and its submarines now venture there biannually.

The Indian Ocean carries more than 75 percent of the world’s trade; borders resource rich areas in East Asia, the Middle East, and Africa; and is home to over 14 percent of the world’s wild-caught fish. The ability to control this area would be a significant step forward along China’s goal of unseating the United States as the leader of the international order.

Fortunately, it’s not all doom and gloom. The rejuvenated India-U.S. military-to-military relationship could provide an instrument to push back against additional Chinese gains. In 2016 the United States and India concluded the Logistics Exchange Memorandum of Agreement or LEMOA. Under the LEMOA, the nations’ respective forces can support themselves from their respective military facilities. The United States and India exercised the LEMOA in 2020 when U.S. P-8 Poseidon submarine-hunting aircraft refueled for the first time at India’s base in the Andaman Islands, thereby extending the reach of submarine-hunting aircraft into the Indian Ocean.

The Communications Compatibility and Security Agreement, signed in 2018, gives India a pathway to high-end sensitive equipment to most effectively employ on the P-8i and MH-60R aircraft acquired from the United States – just in time to track Chinese warships. Boeing F-18 Super Hornets have undergone testing for use as the Indian Navy’s next carrier-based fighter.

But unfortunately, this potential pillar of security and thus economic stability is in danger from the looming threat imposed by the Countering America’s Adversaries Through Sanctions Act (CAATSA). Under the act, originally imposed to punish Russian meddling in the 2016 U.S. presidential election, countries can face financial penalties for significant transactions with specific Russian entities. Since Russia’s defense contractors fall under the list of sanctioned companies, without a waiver, India will incur sanctions as a result of several recent military hardware procurements.

Failure to grant India a waiver will reset the relationship to the last time the United States placed India under sanctions, after the 1998 Pokhran nuclear tests. At the time, India saw the sanctions as a reminder of why not to trust the United States and validation of the non-aligned principle that had guided Indian foreign policy for decades. As a result, India suspended bilateral naval exercises with the United States, deepened its partnership with Russia, and halted momentum in cooperation that has only just reaccelerated.

Just as India decided to go forward with nuclear testing in 1998, it will continue to make national security and foreign policy decisions squarely in its interests. The United States imposed the resultant sanctions during the post-Cold War, post-Desert Storm era, where no single threat to U.S. hegemony existed. All nations were content with the economic benefits they reaped from worldwide security. Unfortunately, that is no longer the case. Now, U.S. sanctions on India would place the global order at risk. The time to grant India a CAATSA waiver is now.