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30 November 2019

An American Failure: CAATSA And Deterring Russian Arms Sales – Analysis

By Jarod Taylor*
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(FPRI) — The threat of sanctions action under Section 231 of the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA) is in the news again. This time it was suggested by the U.S. Assistant Secretary of State for Political-Military Affairs, Mr. R. Clarke Cooper, at the recent Dubai Airshow regarding Egypt’s Su-35 fighter jet purchase from Russia. An unnamed U.S. State Department official spoke on background to the press on November 21, 2019 to discuss the lingering threat of CAATSA sanctions regarding Turkey’s S-400 purchase from Russia. The Egyptian and Turkish cases are only two of several that represent the inability or unwillingness to use Sec. 231 the way it was designed, which not only weakens the U.S. diplomatic position in these instances but also encourages other states to dismiss similar threats. Comments from both officials show that CAATSA Sec. 231 is failing to deter and that the strategic logic underlying the sanctions has changed.

CAATSA Sec. 231 was designed with an ambitious goal in mind: to shape the global security environment by raising the costs for third countries to do business with Russian defense and intelligence industry. The U.S. Congress resolved to use Sec. 231, and other provisions, to respond to Russia’s activities in Ukraine, aggressive cyber operations, and interference in the 2016 U.S. Presidential elections. But resolve and design are not enough: the deterrence mechanism has to be implemented in a way that stays true to the design for it to work. CAATSA’s ambiguities leave room for divergent interpretations by officers in the executive branch. The statute mandates secondary sanctions on entities, either people or organizations or both, who execute a “significant transaction” with disallowed Russian firms. Important elements of the law are purposefully vague, giving the President significant latitude when implementing this law. Left notably ambiguous in the original statute are the definition of “significant transaction,” the timeline for implementation of specific actions, and the specification of which Russian entities are disallowed (specified by the State Department in October 2017).


President Trump sharpened his administration’s approach to this law with implementation guidance, issued through Executive Order 13849 on September 20, 2018. The EO delegated authority to the Secretaries of State and Treasury to identify sanctionable activity and take the actions necessary to execute CAATSA’s several provisions, but did not clarify the definition of sanctionable behavior nor the timeline from identification to designation as a violator. At the time of the law’s signature, and through the issuance of EO 13849, multiple third countries were known to be in either agreement or negotiations with Russia for major defense acquisitions that would undoubtedly invoke CAATSA Sec. 231. At the same time EO 13849 was published, the People’s Republic of China earned the first sanctions pursuant to Sec. 231. In the Russian acquisition process at the same time as the sanctions against Chinese entities were Turkey, India, Egypt, UAE, Saudi Arabia, Qatar, Morocco, and Algeria.

CAATSA Sec. 231, and the associated implementation policy, has so far deterred exactly none of these expected challenges. The opposite has occurred; the Turkish government actually seems emboldened by the disunity and lack of clarity from Washington. Since those sanctions designations on Chinese entities in September 2018, the Turkish government has since received their S-400 shipment (in July 2019) and is reportedly testing the system’s radars using F-16 flight tracks in Ankara. Egypt and India are still publicly pursuing their Russian acquisitions. Washington has publicly threatened sanctions to Ankara, explicitly invoking the mandatory Sec. 231 measures, but at each stage of the process U.S. officials have delayed pulling sanctions action to a later stage, from purchase to delivery to activation to a future negotiated settlement, or used intentionally vague language like “conditions-based.” Despite levying new sanctions on Turkish leaders and ministries after the October 2019 invasion of northern Syria, the CAATSA statute has not yet been operationalized for Turkey’s S-400 purchase even four months after the well-publicized delivery.

CAATSA Sec. 231 has demonstrably failed to deter states because the U.S. government has, from the beginning, been unable to muster the type of strong, unified messaging that is required to credibly signal the threat, discouraged behavior, and alternative behavior to avoid the threat. President Trump’s signing statement was the first detriment to the law’s credibility, followed by the nine-month delay to sanction China pursuant to the law, which itself exceeded the statutory implementation deadline by 50%. The Chinese case set a precedent for triggering the sanctions at delivery, rather than an earlier point like the agreement to purchase. Then the Turkish case proved that the sanctions could be further delayed by executive discretion, without significant political repercussions from the bipartisan, bicameral majority in the U.S. Congress that created the law only 14 months earlier.

The deterrence also failed because the U.S. government did not pair the threat of punishment with a structural alternative that encourages security cooperation with the United States, to the exclusion of Russia. Among the expected challenging cases for CAATSA, Turkey and India in particular, are states that traditionally seek to balance cooperation with both the United States and Russia. Others have excessively discretionary budgets, like the UAE and Saudi Arabia, and can buy multiple incompatible or contradictory systems from both great powers as luxury items to gain policy leverage or influence. In these cases, the only structural incentive from Washington is negative: the message is “do not buy major systems from Russia or we will punish you, probably.” But Moscow does not make the same threat, and the lack of credibility in the U.S. threat to sanction, apparently makes it worth assuming the risk of continuing to do business with both great powers.

The unacceptable risk in the situation is that by abandoning the deterrence logic of CAATSA Sec. 231, as it is encoded in law, the U.S. government has gifted foreign policy initiative to Moscow. The Kremlin can, at will, generate friction between any state — even NATO allies as we have seen with Turkey — and the United States by seriously offering the prospect of a major defense acquisition project. The European Recapitalization Incentive Program is structured to provide the type of carrot that aligns defense policy among U.S. security partners that have legacy Soviet or Russian systems, but is too small, focuses only on European partners, is oriented toward replacing existing equipment, and competes with the European Union’s Defence Fund rather than being a viable alternative to the promise of acquiring advanced Russian equipment in the future. A serious effort to deter “significant transactions” with discouraged Russian defense industry has to offer feasible alternatives to the advanced programs and products offered by Moscow.

The U.S. government faces a choice regarding CAATSA Sec. 231. The status quo is suboptimal and confuses both adversaries and potential partners. To continue on the same path is to, by default, transition Sec. 231 into a cudgel to threaten third countries with punishment for pursuing defense acquisitions with Russia. But that threat is less than credible and lacks a transparent decision-making process, making it appear arbitrary and vindictive. The second option is extreme: get rid of the CAATSA Sec. 231 provision that creates this specific sanctions tool. After all, it is not working the way it is designed anyway and a subliminal Constitutional separation-of-powers argument suggests that executive cooperation in this legislative scheme is unlikely in the future. Third, on the other extreme, is reforming the CAATSA Sec. 231 regime — both the statute and the executive policies involved — to eliminate the ambiguities and offer real alternatives to Moscow’s defense industry.

The reality is that the existing threat of CAATSA Sec. 231, though weakened, fits in with the “America First” foreign policy approach despite the implicit reputational damage earned by raising it in discussion. Suggesting that CAATSA Sec. 231 is a legitimate threat serves as a reminder that the U.S. failed to convince a long-standing security partner to align its defense policy with Washington and its NATO allies, that the U.S. system of separation of powers between co-equal branches of government is somewhat weakened by extreme partisanship at the moment, and that Washington relies too much on economic sanctions to solve its foreign policy problems. CAATSA Sec. 231 is an empty threat until an effort is undertaken to reestablish the statute’s deterrent effect and convince U.S. partners to cooperate with the program. Far from coercing Moscow to change its aggressive foreign policy by strangling Russian defense industry as intended, the threat of CAATSA Sec. 231 unfortunately focuses on punishing U.S. security partners as a substitute for sound strategy.

*About the author: Jarod Taylor is an independent analyst with experience in Afghanistan, Haiti, Iraq, and Turkey. He is a graduate of the Yale University Jackson Institute for Global Affairs.

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