CAATSA Sanctions Framework

The Countering America's Adversaries Through Sanctions Act (CAATSA) is a United States law enacted in 2017 that provides for sanctions relating to Russia, Iran and North Korea. For Russia's defence sector, it requires sanctions against persons who knowingly undertake specified significant transactions, subject to statutory exceptions and waiver provisions.

The trigger for sanctions

Section 231 targets a person who knowingly engages in a significant transaction with a person that is part of, or operates for or on behalf of, the Russian government's defence or intelligence sectors.

• The provision can cover transactions with Russian defence manufacturers and arms-export organisations; it is not limited to transactions directly with the Russian government.
• The statutory target is the person undertaking the qualifying transaction, which can include an individual or an entity, rather than necessarily an entire country.
• Not every transaction automatically attracts sanctions: the requirements of knowledge, significance and the counterparty's connection to the specified Russian sectors must be satisfied.

How the sanctions mechanism works

Once the statutory conditions are met, the President must impose five or more sanctions from the menu provided in Section 235, unless an applicable statutory exception or waiver permits otherwise.

• The menu includes restrictions on export licences, loans from United States financial institutions and United States government procurement.
• Other available measures include restrictions on foreign-exchange transactions, banking transactions and dealings in property subject to United States jurisdiction.
• The mechanism therefore uses access to American finance, markets and technology as leverage against qualifying transactions with Russia.

Waivers and implications for India

The law provides a conditional waiver mechanism, but a waiver is not an automatic entitlement for a partner country.

• For India, significant purchases from Russia's defence sector can raise CAATSA exposure, making the framework relevant to defence procurement and relations with the United States.
• CAATSA represents unilateral United States sanctions, not sanctions imposed by the United Nations Security Council.