The “123” nuclear deal saga: What has India gained, and what has it lost?

The “123” nuclear deal saga: What has India gained, and what has it lost?

* Tuesday, November 2 2010


Ever since the United States offered India the nuclear cooperation deal in July 2005, and India lapped it up, it has been clear that Washington would have to resort to subterfuge, stealth and arm-twisting in pushing through this unique arrangement for India within the global nuclear order. This order prohibits civilian nuclear commerce with a country which has not signed the Nuclear Non-Proliferation Treaty but has exploded atomic bombs.

Special to ‘Hastakshep’, 2 November 2010

by Praful Bidwai

Ever since the United States offered India the nuclear cooperation deal in July 2005, and India lapped it up, it has been clear that Washington would have to resort to subterfuge, stealth and arm-twisting in pushing through this unique arrangement for India within the global nuclear order. This order prohibits civilian nuclear commerce with a country which has not signed the Nuclear Non-Proliferation Treaty but has exploded atomic bombs.

So the global arrangement would have to be tweaked, bent and distorted to accommodate India. President George W Bush would have to manipulate and cajole the US Congress and then pilot the deal through the International Atomic Energy Agency and the Nuclear Suppliers’ Group, overcoming covert and overt opposition. But the Americans calculated all this would be worthwhile. Pampering India with the deal would be the best way of massaging the Indian elite’s ego and curing it of its self-inflicted sense of injury at the denial of “equal treatment” and at “discrimination” in access to nuclear technology after India’s first nuclear blast of 1974. The fact is India wanted to have its nuclear weapons cake and eat it too.

Pushing the deal through would mean dishonestly representing a military nuclear arrangement as a civilian one. But it would decisively pry India out of its independent foreign policy and security framework, ensure that it reneges on the promise of fighting for nuclear disarmament, and bring India firmly into the US camp after 60 years. It would also help US corporations to get new reactor orders which they haven’t domestically had since 1973.

For their part, Indian leaders knew they would have to overcome fierce opposition to the deal from the Left parties, on which the United Progressive Alliance’s survival critically depended. India would also have to bargain hard with the US to keep military facilities and fast-breeder reactors out of IAEA inspections, and demand “reciprocity”: if the US cites its domestic law to say it would be compelled to ask India to return reactors/fuel in the event of an Indian nuclear explosion, India would also demand adequate warning and continuity in supplies through alternative sources.

Both sides knew the arrangement wouldn’t be perfect or symmetrical. Corners would be cut and compromises made. There would be internal and external opposition and much resentment from Pakistan and China.

The negotiations, at times worse than haggling in the fishmarket, went on for five years. The UPA invested more political energy and diplomatic capital in pushing the deal through international and national forums and moving towards operationalising it, than on any other issue, including the flagship National Rural Employment Guarantee Act. The last hurdle was recently crossed with the passing of the Civil Liability for Nuclear Damage Bill.

The story of manipulation, subterfuge, deception and stealth in the Bill’s formulation and passage is probably unparalleled in the history of law-making in India. Never before has a government resorted to so many tricks, sleights-of-hand and outright tampering to bend a Parliamentary standing committee’s report to its narrow parochial ends—namely, letting the suppliers of nuclear plant and equipment off the liability hook even if design and manufacturing defects are responsible for a mishap. The government even smuggled in the word “and” between two sub-clauses of Clause 17 of the parliamentary committee-recommended draft to allow this. Finally, the Bill as passed raises the operator’s liability for an accident from Rs 500 crores to Rs 1,500 crores ($320 million). But this is peanuts in relation to the likely damage from a serious nuclear accident, running into trillions of dollars. Section 17(b) gives the operator the right to sue the supplier.

The US is upset with this and has brazenly said India’s law lacks conformity with international norms. It wants the rules under the Act to be amended to allow for “voluntary surrender” of the right at least in respect of US companies. The US resents the fact that it pioneered and proposed the deal and manoeuvred it through suspicious global forums. But the nuclear contracts under the deal have all gone to France and Russia. India has refused the US request and instead signed the Convention on Supplementary Compensation for Nuclear Damage (CSC) to claim conformity with global norms. The Convention is silent on the operator’s right of recourse.

Indian negotiators can congratulate themselves endlessly for resisting US pressure. But they must pause and ask exactly what they have achieved by reneging on global nuclear disarmament, strategically aligning India with the US, and promoting a form of energy that’s technologically outdated, grossly unsafe and in retreat worldwide. The US won’t be easily satisfied with India’s answer on the liability law. In practice, it will probably demand some special concessions like more reactor sales on favourable terms from nuclear corporations like General Electric and Westinghouse, lucrative side contracts on fuel and spares, high consultancy fees, etc.

However, there is now a hurdle, from a third source. India’s talks with Japan on a bilateral nuclear deal, which replicates the “123 agreement” and similar deals with Russia, France, Britain, etc., have run into trouble. Japan demands India’s commitment never to test nuclear weapons. Now, a Japanese company is the world’s sole manufacturer of certain specialised forgings used in the large reactors made in the US and France. Unless Japan comes on board, these suppliers cannot deliver. It is unclear if and when these hurdles will be overcome. Japan, after all, is the world’s only country to have suffered nuclear bombings, whose devastating effects have deeply influenced domestic public opinion.

At the end of the day, many uncertainties will remain as India tries to implement what it thought was a historic bargain, but may turn out a mirage in strategic, political, energy security and climate terms. As India emerges as a major power on the world stage, such dubious deals cannot replace the priority of forging an independent, progressive policy for making the world a less unjust, unequal and fraught place. —end—