Why US could lose out on India nuclear trade

US companies may end up watching from the sidelines as nuclear fuel and technology trade between India and other suppliers develops.

That is the warning to Washington if the Indo-US nuclear deal is unable to get Congressional approval in time.

Experts closely associated with the deal say there is a serious risk that the Congressional calendar may not have enough days left to clear the deal, that is assuming that India gets the go-ahead for it from the International Atomic Energy Agency (IAEA)and the 45-member Nuclear Suppliers Group (NSG).

A nod from the IAEA and the NSG would open the door for India to trade in nuclear fuel with other countries. But US companies would still have to wait for a final approval by Congress to engage in this potentially lucrative trade, even though it was set in motion on US soil.

Xenia Dormandy served as the director for South Asia at the National Security Council when the deal was conceived in July 2005 during Indian Prime Minister Manmohan Singh's visit to Washington.

She says if the NSG clears this deal, US congressmen may find themselves in a situation where India can engage in nuclear trade with every other country but America.

If Congress doesn't ratify the deal in time and US companies lose out, "that will be a big blow to our industry," says Ms Dormandy, who now serves as the director of the Project on India and the Subcontinent at Harvard University.

She says there is nothing in international law to stop India from doing nuclear trade with countries like Russia or France.

Congress needs to be in 30 days of continuous session to clear the nuclear deal. But there are only about 40 session days left before it adjourns on 26 September.

A spokesperson for the House Foreign Affairs Committee, Lynne Weil, was quoted by the Washington Post saying that both IAEA and NSG actions "have to take place in the next couple of weeks for the deal to be considered by Congress".

The Congress could convene for a lame-duck session after the 4 November elections, but for now House speaker Nancy Pelosi has said there will be no such session.

The State Department though has repeatedly said that the current administration will keep trying until 19 January, the day before the next president takes his oath of office.

"There will be a lot of lobbying from US industry to make the Congress move as quickly as they can," says Ms Dormandy.

Swadesh Chatterjee of the Indo-US Friendship Council, a group that has worked hard for the deal, says if the Congress wants, it can reduce the timeframe needed to ratify it.

"We have already started mobilising our group, working closely with US business interests and the administration," says Mr Chatterjee.

He points out that the 2006 Hyde Act, which provided the framework for the nuclear deal in Congress, was passed at 0130 hours on the last day of a lame-duck session in 2006.

"This needs a simple up and down vote and they better think twice if they can't assemble for something that's so important for US business as well as Indian-Americans," says Mr Chatterjee.

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The N-deal and the Elephant

No issue in the last decade has generated so much uninformed debate as the proposed Indo-US nuclear deal.

Vociferously opposing the deal are the left and right poles of Indian politics - the Communists and the Bhartiya Janata Party (BJP).

‘N-deal is not in US interest’ | Special: Indo-US Nuclear deal | Full coverage
These Communists, who say it compromises India’s sovereignty and defence, are the same ones who were in the forefront of opposition to the Pokhran II tests and the subsequent overt nuclearisation posture of the BJP.

The BJP, which initiated the Next Steps in Strategic Partnership (NSSP) initiative with the US, is now opposing the very step that is necessary to bring it to fruition.

Then, we have the BSP’s Mayawati and a Communist spokesman opposing the deal on the grounds that the Muslims of India are against it.

Why do Muslims oppose it? Ostensibly, because they dislike Bush and his anti-Iraq and anti-Afghanistan policies? Nobody explains what that has to do with India’s foreign policy. Can we then assume that if Barack Obama becomes the US President, this opposition will end?

A section of retired scientists say the deal will compromise our independent research in Thorium-based power reactors. But the current chairman of the Atomic Energy Commission insists that nothing of that sort will happen. Some others claim that the deal will prevent further nuclear testing while American non-proliferation ayatollahs object for opposite reasons.

Uncle Sam’s nuclear hardsell
Never was there a greater need to sift the grain from the chaff. This is an attempt to shed some light on the issue through a non-partisan prism.

The first and the foremost thing to understand is that the Indo-US nuclear deal has to be viewed from several perspectives, namely:

Future requirements of nuclear-based power in energy-starved India. For this we need reactors, technology to build them and Uranium fuel.
Restrictions that the deal puts on India’s military nuclear programme.
Its effect on our Thorium programme.
Its overall impact on the technological curbs put on us since our first nuclear test in May 1974 (and not May 1998 as is commonly thought).
Its importance in evolving Indo-US strategic partnership in the global context of rising China.
Unnecessary fuss is being made over nuclear energy, which today is only 2 per cent of our over all energy production. But yet some say going to IAEA will mean compromising our independence.

True, but that is precisely the point. We have lagged behind because we do not have world co-operation in civil nuclear energy since 1974. We are denied this under the provisions of the NPT (Non Proliferation Treaty) signed in 1968.

Our discussions with IAEA are meant to get us into the NPT beneficiary list without signing away our right to make nuclear weapons. With oil heading for $200 a barrel, we badly need nuclear energy for our future.

UPA employs life support for nuclear deal
Incidentally, some of our nuclear plants, Tarapur I, Rajasthan I and Madras II, are already under IAEA safeguards and are inspected regularly to make sure that the spent fuel is not used for military purposes. We have been fighting for last three decades to get IAEA to give up its insistence on “full scope safeguards,” which mean not just imported reactors/fuel but also indigenously developed reactors and separated fuel will be under international control.

The present deal makes an exception for us, where only the imported reactors and fuel and some of our own indigenous reactors will be subject to IAEA inspection. The IAEA has agreed to keep our reactors in BARC (Dhruva and fast breeder reactors) out of its purview. These are freely available to us to continue to generate fissile material for military purposes.

A section of scientists say that the deal will push back our indigenous Thorium-based programme and that we do not need foreign help.

As per the original plans of Dr Homi Bhaba, we should have had a working Thorium reactor by the 1980s. Our first test reactor ‘Purnima” was established way back in 1972. Yet we are still far away from a working model. We began work on a nuclear submarine 20 years ago, with nothing to show for it so far. Our LCA (Light Combat Aircraft) project is similarly stalled.

There are many such examples of delay due to the denial of technology transfer. Recently, there were reports that an Indian origin person in an American company had been jailed for supplying some trivial material to Indian Space Research Organisation and Bharat Dynamics (who makes missiles). All this will end once we are accepted as a ‘de-facto’ nuclear weapon state.

N-deal serves the US better
The Indo-US deal, our agreement with IAEA is all about this. This is a way out of our technological isolation without jeopardising the ‘letter’ of NPT, though there are many non-nuclear weapon countries who are crying foul as they feel that India is being favoured.

The nuclear deal is a first step in getting us out of various technology denial regimes like the Wassenaar Arrangement which denies all dual use technologies to us, the Missile control regimes and ultimately the Nuclear Suppliers Group.

Yet there are some Indians who insist on opposing this.

The Left says the deal will make us dependent on the Americans, who have let us down earlier. Remember 1971, when they threatened us militarily?

Among the opponents of the deal, the Left has been the most honest. They don’t deny that the nuke deal will indeed help us in energy sector. Their opposition is to the Indo-US strategic partnership, which they see as US efforts to set up India as a counterweight to China. Indian Communists are ardent Chinese patriots, and therefore oppose the deal. Their deafening silence on many Chinese actions like claiming Arunachal Pradesh or helping Pakistan proves their sincerity towards safeguarding Chinese interests.

Was tech apartheid good for India?
Opponents of friendship with US often forget that in 1962 in face of the Chinese aggression, the US had actually come to our rescue. Even in nuclear field, in the early 1960s, it was the US that helped us and actually was pressing us to go nuclear in response to the Chinese nuclear test.

When it comes to foreign policy, there are no permanent friends or enemies, only permanent national interests. At the moment, Indian and American interests coincide on issues ranging from the war against terror to bringing down oil prices. These interests are unlikely to change for a while. The Indo-US partnership is dictated by these factors.

But what about further nuclear tests? Will this agreement restrict our nuclear weapons programme?

For last 10 years, no major nuclear power has carried out a live test. Yet, by its own admission, the US continues to modernise its arsenal. It is possible today to test and improve designs with help of computers. In exchange for moratorium on tests, it should be not impossible for us to get the relevant data on tests already conducted by the P5. To test or not to test is now a matter for technical experts and if they are comfortable with it (as the Atomic Energy Chief Dr Kakodkar has asserted) then we must believe them.

N-deal: Killing India with kindness
The size of a nuclear arsenal needed to ‘deter’ a possible adversary is subjective, but there is a limit beyond which there is ‘overkill’. I do not claim to know the exact size and shape of our nuclear arsenal. But certainly the nuke deal puts no restrictions on our continued production of fissile material for military purposes.

Sometime ago an attempt was made by the Non Proliferation lobby in the US to get the FBR (fast breeder reactors) under IAEA and thus away from our military programme. But in tough negotiations our scientists and diplomats managed to get out of this predicament. Our military nuclear programme is thus safe. What is more, in the prevailing geo-political situation, it is the US that is interested in India balancing China, like in the early 60s. So why should it work to thwart Indian military nuclear programme?

What are the chances of the nuke deal getting through the IAEA and Nuclear Suppliers Group, where China is member and many countries, like Australia and Japan, have opposed us?

The opposition by countries like Japan and Australia, close allies of the US, is posturing and part of the American pressure tactics. But once the US is on board, these countries will follow suit.

China’s attitude is however an enigma.

So far the Chinese have said very little on the issue. I have a personal experience of the Chinese worry over our closeness to the US, during my visit to that country and dialogue with them. But so far the Chinese were in a happy situation since the Communists were doing their job. It is a dilemma for the Chinese since they themselves are dependent on American technology for civil nuclear programme and would not like to shut that door. Our comrades who oppose the US friendship forget that the Chinese progress in many fields owes itself to the generous American help since 1980s Reagan era when the two were in alliance against the erstwhile Soviet Union. China will try its level best to thwart India but will not take on the US.

What will we gain from this deal?

First and foremost, our languishing programmes like the nuclear submarine, LCA and even Thorium reactors will receive a much needed boost. An immediate impact will be to speed up the Russian supplied Kunakulam project that will add 2000 Mw to our Southern grid. In time to come, our co-operation with France, which has vast reserves of Thorium like us, will help us attain energy security in long run.

N-deal serves the US better
The impact of technology imports, permitted once the restrictions are removed, will not be confined only to defence sector or nuclear industry, but felt across the board. In the 21st century, the US is keen to find an alternative to the Chinese as far manufacturing is concerned. This is a win-win situation for both the countries. The only possible loser is China.

Growing Indian clout may well force China to modify its hostility to us and make it more reasonable on the border issue and more sensitive to our concerns vis a vis Pakistan.

There is no danger of India ever becoming the US poodle. Indira Gandhi had once famously said, “Nobody keeps an Elephant as a pet”.

The Indian elephant is too costly and powerful to become a client state of any nation.

Col. (retd) Anil A Athale is a Fellow at the Centre for Armed Forces Historical Research. A former Joint Director (History Division) and infantryman, he has been running an NGO, Peace and Disarmament, based in Pune for the past 10 years. As a military historian he specialises in insurgency and peace process. Colonel (Dr.) Anil Athale is the author of ‘Nuclear Menace: the Sataygraha Approach’, published May 1997.

The views expressed in the article are the author’s and not of Sify.com

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