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After India had announced the agreement, the United States stated that CAATSA was not intended to harm the partners, but that it was not a waiver . Almaz Antey – the leading manufacturer of air defense systems in Russia – is one of the main targets of the US administration and is on an older sanctions list that prevents financial institutions from focusing on them.
The Indian position was that the S-400 talks with Russia had been initiated well before the announcement of CAATSA's sanctions and that the agreement had been concluded in the national interest.
However, on September 21, the United States sanctioned the Chinese Department of Military Equipment Development under CAATSA for the purchase of S-400 by Beijing. This contract was also signed before the adoption of the Sanctions Act, but the fine was apparently imposed as deliveries and payments took place this year.
For India, dealing with Almaz Antey poses a big problem mainly on the payments front. No Indian bank is willing to use the payment channel for the transaction, although the assurance that CAATSA will not be used is given. CAATSA allows the United States to suspend export licenses for dual-use items, prohibit US investment, prohibit borrowing from international institutions and limit visas.
Almaz Antey also reported on the sanctions imposed at the end of 2016 by the "Designated Nationals" (SDN), which prohibit financial transactions with her. To transfer $ 5.43 billion to Russia, the banking channel will not be able to transfer without the risk of being on the list of bans. "Since international transactions involved dollar transactions, no bank could join the sanctions list," an official told ET.
The problem also lies in the Russian side, its main banks having also refused to be used to perform these transactions.
All of these banks risk being isolated from global commerce for processing payments related to the S-400 transaction. For several months, a solution is in use, which involves using the Indian bank of the Union, but the problem has not been completely solved.
People aware of the situation told ET that the Russian side had suggested a permanent solution to this problem by setting up a substitute bank for military transactions. The issue has been discussed at the highest level but little progress seems to have been made, the sources said.
Even before CAATSA, multi-billion dollar payments to Russia for ongoing contracts have been stalled over the past two years due to the sanctions of the League of Nations. They include payments for programs to extend the life of Russian Kilo-class submarines, money to be sent to Moscow to repair the Chakra nuclear attack submarine that caused an accident and contracts spare parts and parts in progress.
Main transactions in the civil sector
Memorandum of Consultations between the Ministry of Foreign Affairs and MEA for the period 2019-2023 – this will intensify the Foreign Office's consultations between the two parties. India has decided to open consulates in Yekaterinburg and Astrakhan.
Memorandum of Understanding between the Russian Ministry of Economic Development and NITI Aayog – the first meeting of the strategic economic dialogue between NITI Aayog and the Russian Ministry will be held later in 2018 in Russia to stimulate investment in the priority areas of the countries respectively. Russia will open an office of the Far East Agency in Mumbai to promote investment in this country
Memorandum of Understanding between ISRO and the Russian Federal Space Agency ROSCOSMOS for the Training of Indian Astronauts to the Indian Human Mission Gaganayan
Memorandum of cooperation between the Indian and Russian railways. India has invited Russia to participate in the railway infrastructure in India. The Russian side has expressed interest in taking part in international tenders as the Ministry of Railways of India decides to carry out the train raising projects.
Action Plan for prioritizing and implementing areas of cooperation in the nuclear field – for Russia's second nuclear power plant; partnership with a third country
Memorandum of Understanding between the Russian Ministry of Transport and the Indian Railways in the framework of development cooperation in transport education – to help Delhi build transport and connectivity corridors
Memorandum of Understanding between National Small Industries Corporation (NSIC) and Russian Small and Medium Enterprises Corporation (RSMB)
Cooperation Agreement in the fertilizer sector between the Russian Direct Investment Fund "(Russian Sovereign Fund); PJSC Phosagro (PhosAgro) and Indian Potash Limited.
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