Russia Sanctions

Since the Russian Federation’s invasion of Ukraine that began in late February, the US has spearheaded sanctions efforts targeting key entities in strategic sectors and individuals in Russia. While media coverage frequently focuses on those impacted by the sanctions, little attention is often given to the process through which the sanctions are authorized. In the instance of Ukraine, one of the authorities the United States can leverage is a lesser-known law: the Countering American Adversaries Through Sanctions Act (CAATSA). President Trump signed CAATSA into law in August of 2017, which authorizes the implementation of sanctions by executive order of the President or statutes passed by Congress on entities undertaking “significant transactions with Iran, North Korea, or Russia.”[1]

While the origins of this legislation are linked to Russia’s annexation of Crimea in 2014, the most pertinent provision of CAATSA to the current Ukrainian crisis are those in Section 231, which details that sanctions may be imposed on entities that knowingly engage in a significant transaction with entities that are part of or support the “defense or intelligence sectors of the Government of the Russian Federation”.[2]  This specific authority has been used multiple times since its inception, most notably the sanctioning of Turkish defense entities in December of 2020[3] and for sanctioning Russian entities in March of 2021 for the poisoning and imprisonment of Aleksey Navalny. [4]

The provisions of CAATSA allow the US to impose a combination of sanctions provisions on entities in third countries for undertaking significant transactions with the countries of concern:[5]

  • Export-Import Bank Assistance for exports to sanctioned persons
  • Export sanctions – restrictions on the issuing of licenses to export any goods or technology to the sanctioned persons
  • Loans from US financial institutes or international financial institutions
  • Prohibition on the provision of services from financial institutions
  • Procurement sanctions which prohibit the US government from procuring goods or services from the entity
  • Foreign exchange restrictions
  • Banking restrictions prevent the use of banking services when there is a US nexus (n.b. this can extend to all transactions using the US Dollar).
  • Restrictions on property transactions
  • Ban on investment in equity
  • Exclusion of corporate officers or principal executive offers

This list can be thought of as a menu of measures that the US has access to under the CAATSA authorities. What does this mean for the situation in Ukraine? Since CAATSA facilitates the implementation of sanctions on entities in third countries that aid the Russian defense sector, it will be an important tool for deterring support to the Russian defense sector. The Russian economy is already rapidly declining from the sanctions implemented by many western states. With these measures in place and Russia’s reliance on imports for many goods, such as aero-engines, there will be a necessary  incentive to look to other countries’ markets to substitute the goods no longer being provided by the West.

This is where CAATSA comes in. Under the provisions of CAATSA, if foreign entities in China or India, for example, were to supply the Russian defense sector with strategic technology, those third-party state’s entities may be subject to US sanctions. The opposite is also true – entities cannot purchase goods that qualify as “significant transactions” from the Russian defense sector, which is a major supplier of military systems globally without the risk of being subjected to US sanctions. In short, the CAATSA authorities effectively force countries and companies to decide between engaging with the Russian defense sector or engaging with the international marketplace, including the global financial system which is dominated by the use of the US dollar.

The implications for CAATSA need to be worked through on a country-by-country basis. The US President can waiver the sanctions under certain circumstances. But the US will likely be circumspect in issuing waivers and will look to use the CAATSA authorities to separate a foreign country from the Russian defense sector. The CAATSA authorities will thus be an important tool through which the US can wedge countries away from Russia.

For example, in the case of India, several India-facing news sources have highlighted concerns about the implications for the Indian defense sector, which buys many military systems, such as helicopters and anti-tank weapons from Russian entities and are cooperating with Russia to produce Brahmos missiles.[6] The US could use CAATSA to discourage such cooperation.

Further, in the case of China, CAATSA may be an instrument through which the US will discourage cooperation with Russia.  China is likely to push back against the US use of CAATSA as impinging on its sovereignty. China is also somewhat more resistant to CAATSA-like measures because it has been pursuing indigenization of strategic technology supply chains for many years and the fact that the US has already sanctioned many key Chinese entities and sectors. However, despite this, CAATSA can enact substantial real costs on Chinese entities that supply Russia’s strategic sectors if the US decides to put pressure on China’s support for Russia in this way.

There are likely to be additional countries and sectors that are affected by CAATSA. For example, Russia has long been one of the leading exporters of nuclear reactors. While there are good reasons to tread lightly in sanctioning Russian entities involved in current nuclear cooperation projects overseas, because Russia has committed to take back the spent nuclear fuel, CAATSA is likely to be explored as an instrument through which to dissuade countries from embarking on new reactor construction projects with Russia.[7]


CAATSA is an important sanctions instrument that deserves more attention. It is likely to be a key instrument for the US in further isolating Russia following its invasion of Ukraine. The US is likely to leverage CAATSA authorities in countries such as China and India that have thus far been hesitant to restrict cooperation with Russia in relation to defense and strategic technology. Companies in these countries will be forced to decide between doing business with the Russian defense sector and engaging with the broader international marketplace. While the US can waive CAATSA sanctions provisions under some circumstances, it can be expected that the US will take a tough line with any country continuing to engage with Russia. CAATSA authorities are thus likely to be central to the future direction of US relations with many countries around the world.







[7] See for example the comments of Richard Nephew: