Friday, January 30, 2015

The India-USA Mini Nuclear Deal


   The India-USA nuclear agreement referred to in the January 2015 Joint statement of President Obama and Prime Minister Modi needs to be viewed in a historical context.  There are too many educated people in India who believe that the India-US nuclear deal of 2005 was mostly  about civil nuclear co-operation and about US selling nuclear reactors to India. This represents a dangerous misunderstanding of India’s perspective and National interest.

India-USA Nuclear Agreement (2005)

   The 2005 Indo-US nuclear agreement was, from India’s perspective mostly about Strategic & Defence technology. These are technologies, products and services that are not governed by normal rules of competitive markets. Their development, production, sale and export is controlled by all countries who have the capability to develop or produce them.  The 2005 deal was a game changer for India, because it promised to break the “technology denial regime” (termed “Nuclear Apartheid” by us) covering a wide range of “Strategic Technologies”, put in place under US leadership, to punish India for its PNE (nuclear test) in May 1974.  Geo-politics and domestic politics of the two countries, made it necessary to give “peaceful nuclear energy co-operation” a central position in the public discourse, even though its importance to India was small compared to that of “strategic technology”(1/4th of total say). 

  India’s “Nuclear liability law (2010)” appeared however to jeopardize the ‘peaceful nuclear co-operation’ element of the historic deal, the basis on which many influential Americans either supported or reluctantly acquiesced to the deal. The slowdown, and a few major reversals, in economic reforms from 2010, which halted progress toward more open, market based development, accentuated the sense of betrayal among influential US lobbies, leading to an unpleasant counter reaction. PM Modi, with his new approach to economic and foreign policy and President Obama’s appreciation of this approach, has put India-USA relations back on the rising trend, from which it was derailed in the previous 4-5 years.

Mini Nuclear Deal (2015)

    The India-US mini nuclear deal clears the logjam created by the Nuclear Liability law, which under communist cum leftist pressure, broadened potential liability for nuclear power accidents, much further and deeper than any other country’s law (opening space for individuals to sue original supplier for personal damages). This “social revolution” could also have ended Indian nuclear power development for good, much to the delight of anti-nuclear activists. A broad political solution has been found around this law, as well as an equally unreasonable demand for universal & lifetime tracking of nuclear supplies by USA itself, rather than by the agency IAEA, responsible for such tracking under multilaterally agreed rules.

Implications & benefits

    A number of analysts have pointed to the fact that, there is no public document giving the specifics of this agreement and that it is not clear whether US companies will actually determine that the risks are now reduced sufficiently to make it profitable to set up nuclear power plants in India. In my view, this is the least important part of the mini-deal from our perspective. 

      For India, it is more important that the deal opens the way for similar operational agreements with Japan, which is an important supplier of nuclear reactor vessels and major equity holder in US Westinghouse Corporation. Similarly the India-Australia agreement on Nuclear co-operation can now be quickly operationalized, to start supply of Uranium for use in India’s Nuclear power reactors. 

    Most importantly, It clears the way for US to resume action on its commitment to assist India in joining the four technology clubs (NSG, MTCR, Wassener Agreement, Australia Group) which still impede India’s access to “strategic” technologies, parts and components. The full promise of the India-US nuclear deal (2005) for India will only be realized once we are admitted into these control regimes.

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