India-U.S. Nuclear Deal

Long-Maul Exercise
 
The deal’s main benefit for India remains the symbolically important message of July 18, 2005 that the United States, reversing a three-decade punitive approach toward India, has embraced it as a “responsible” nuclear state. The actual incentive proffered by the United States — the lifting of civil nuclear sanctions — is of less significance because high-priced imported commercial power reactors can play only a marginal role in meeting India’s energy needs. In other words, India is already savouring the main gain from the deal.
 
Brahma Chellaney
 
© Asian Age, March 10, 2007
 
The controversial US-India nuclear deal may not be in the news these days but it quietly continues to ferment new issues. Even as America and its friends persist with their hard sell of the deal, increasing doubts about the wisdom and costs of pushing ahead with it on terms set by the US Congress have gripped the Indian establishment. 
            After the conditions-laden Hyde Act was passed, Prime Minister Manmohan Singh had told Parliament, “Clarifications are necessary, and will be sought from the US, because there are areas which cause us concern.” However, instead of clearing India’s specific concerns, Washington continues to project a rosy picture and make light of the PM’s statement. Assistant Secretary of State Richard Boucher gloated before a congressional panel three days ago that the Hyde Act has been “very well crafted” to let President George W. Bush and Dr. Singh “move forward in a way that is prudent and in a way that meets their own expectations.”
            Yet the projected timeframe for stitching up the final deal continues to slip. When the agreement-in-principle was unveiled on July 18, 2005, it was sanguinely claimed by both sides that by spring of 2006, the deal would take effect. Then when the Hyde Act was passed, US officials voiced optimism that the final deal would be before Congress by July 2007. 
            Now Washington has further revised the deadline to late 2007 or early 2008. Even that seems overly optimistic when one bears in mind that after almost 20 months, only the first of the five phases has been completed to clinch the final deal. There is still a long road ahead for the two sides to traverse.
  Let’s not forget that the US-China nuclear deal, signed in 1984, took nearly 14 years to come into force, and another nine years thereafter for Beijing to place its first import order for US reactors. The US-India deal, in fact, involves more processes and complicating factors. Long after the original actors involved in the July 18, 2005, accord have faded into history, India would still be grappling with the deal-related issues.
  Indeed the deal’s main benefit for India remains the symbolically important message of July 18, 2005 that the United States, reversing a three-decade punitive approach toward India, has embraced it as a “responsible” nuclear state. The actual incentive proffered by the US — the lifting of civil nuclear sanctions — is of less significance because high-priced imported commercial power reactors can play only a marginal role in meeting India’s energy needs. In other words, India is already savouring the main gain from the deal.
  Still, the US continues to flog the deal when in reality the Hyde Act has become an epitome of Washington’s penchant to overplay its hand. Such overdo in seeking to hold India to a plethora of concessions and good-behaviour conditions could have made sense if the only choice New Delhi had was to take it or lump it. Fortunately for India, it has more than wiggle room. Indeed its interests do not dictate any urgency in wrapping up a final deal. Even if it deferred a decision ad infinitum, any future terms for gaining a right to import power reactors and fuel can only be better, not more mortifying, than those laid down in the Hyde Act. 
  Any dispassionate appraisal shows that, on balance, America stands to gain financially and politically more than India from the final deal. Even in the nuclear-power sector, the deal would help create thousands of new American jobs through exports to India, and provide US industry — which hasn’t built a power reactor in almost three decades — access to broad-based Indian engineering expertise in areas ranging from uranium processing to heavy-forging capabilities in reactor construction, as a currently-visiting delegation of executives of 18 US nuclear companies acknowledges.
  So it is astonishing that the American executive and legislature should have framed the terms of a final deal in such a manner as to engender growing misgivings in India. Washington clearly miscalculated that India was so desperate for a final deal that it would accept debasing terms, even if reluctantly.  
  Ironically, while India needs to be in no hurry, the deal is a matter of urgency for American strategic and financial interests. For America, the deal opens the way to not only India’s strategic co-optation but also securing tens of billions of dollars worth of contracts, as the US-India Business Council admits. It is not an accident that the most-fervent force still pushing for a final deal continues to be US corporate and political interests.
           The delay and uncertainty over a final deal have only prompted American officials to demand that India start delivering to the US on the promised rewards now. Many of the coveted rewards have little to do with the nuclear-power sector. Rather they extend from arms contracts to the opening up of the Indian retail and financial sectors. The nuclear deal is also at the core of US foreign-policy efforts to bring New Delhi closer to the American position on issues ranging from Pakistan and Iran to the Doha Development Round negotiations.
  Far from the cards being stacked against it, India today has sufficient leverage to manoeuvre negotiations with the US in a way that its interests are safeguarded. What it needs is tact, patience and perseverance for a potentially long-haul exercise.
  The correct response to Washington’s overplaying of its hand will be to focus on Indian concerns and not allow the country to be cornered by a US legislation patently beyond the pale. Shining the spotlight on India’s concerns and insisting that the US satisfactorily address them also obviates the need to reject the Hyde Act or disengage from any process. 
  Put simply, India ought to buy time to shield its long-term interests. Sound diplomacy doesn’t come without statecraft. Nor can diplomacy deliver results without team work or with the other side setting the agenda and timetable. New Delhi needs to sort out several issues.
The sequence in which the remaining processes are to be carried out cannot disadvantage India. To some extent, this already is happening, as the US has tacitly revised the sequencing. After having complained last year that New Delhi was not doing enough to lobby member-states of the Nuclear Suppliers’ Group for a special exemption from the cartel’s export controls, the US now says the NSG process can wait. And after having announced in December that the next phase would involve negotiations to conclude a bilateral civil nuclear cooperation agreement (the so-called 123 accord), the US says India’s proposed agreement with the International Atomic Energy Agency demands equally high priority. 
            It is apparent now that the NSG would consider an exemption only after India has reached an agreement with the IAEA to bring its entire civil nuclear programme under external inspections (safeguards). The US is pressing India for an early conclusion of such an agreement with the IAEA.
  While an accommodating India has agreed to parallel processes with the IAEA and the US to negotiate a safeguards pact and a 123 agreement, respectively, the sequencing issue is far from settled. How can India finalize a safeguards pact without clarity on an NSG decision and the 123 agreement? Given that the US Congress legislated a conditional exemption for India from US export controls without awaiting the safeguards pact, why should the NSG insist on awaiting the outcome of the India-IAEA process before carving out an India-specific exception? 
  New Delhi believes that with IAEA Director-General Mohamed ElBaradei’s support, a safeguards agreement could be reached quickly, although no one can predict how such an accord would fare with the Agency’s 35-nation governing board. But once India has finalized a safeguards pact and “concluded all legal steps required prior to signature,” as sought by the US, drawing back from those “legal steps” would not be easy.
           While it is true that some other NSG members also think that the nature and scope of IAEA safeguards India agrees to would be crucial to getting the NSG to fashion a special exemption, relegating the NSG action to the penultimate process very much suits Washington. In the fifth and final phase of the deal-making process, the US would have to take the entire package of actions to its legislature for approval, as required by the Hyde Act. 
  An early NSG exemption would only arm India with leverage vis-à-vis the US. But keeping the NSG decision hanging till the last-but-one stage, Washington believes, would help make New Delhi comply with the extraneous preconditions mandated by the Hyde Act, such as the requirement that India adhere to the Missile Technology Control Regime, yet remain subject to US missile and space sanctions. The US has now submitted a detailed dossier on how India should unilaterally but formally adhere to MTCR by implementing “specific procedures.”  
The increasingly strained relations between the Ministry of External Affairs and the Department of Atomic Energy call for urgent repair. The bad blood between the DAE and the MEA, as personified by special envoy Shyam Saran and Foreign Secretary Shivshankar Menon, is an open secret. Their thinking and approach on the deal remain not in sync.
If India is to advance its interests, this sorry state of affairs needs to end. How can India conduct effective negotiations on a nuclear deal if the chief negotiator does not inspire confidence in the nuclear establishment? Or when a media campaign now and then is scripted against nuclear scientists by a still-mysterious force? Without team play and mutual respect, diplomacy cannot work.
          In the latest disagreement, the DAE wanted the MEA to secure clarifications from the US on key Indian concerns before submitting an Indian draft of the planned 123 agreement. After all, the PM had himself underscored the necessity of such clarifications. The US-Indian differences on some fundamental issues remain so wide that without finding ways to narrow them, it would be pointless and even counterproductive, the DAE argued, to hand in an Indian counter-draft to the version submitted by the Americans in March 2006.
The DAE was genuinely concerned about India getting into a bureaucratic haggle over wording where semantic compromises are sought by negotiators to paper over real differences. The divergence on issues is such that, even if skirted, it would inexorably surface later, only to exact a heavy price. The DAE thus wanted to first clear the key differences and find mutually agreeable language codifying that understanding in the draft 123 accord. 
The Saran-Menon duo, however, pressed for forward movement in the 123 process through the submission of the Indian counter-draft. The US State Department, for its part, contended that it was futile to continue discussions on the Hyde Act because it had given all the clarifications it could on the legislation. Both the MEA and the US became impatient with what they saw as stalling tactics by the DAE.
In the end, the MEA had its way, with the foreign secretary handing over last month in Washington the Indian counter-draft — to which the US has still to respond. Despite Dr. Singh’s assurance in Parliament last December that clarifications were necessary on areas of divergence, deep differences remain on several core issues. 
Those differences have arisen because the US legislature spurned most of Dr. Singh’s benchmarks, as spelled out by him in Parliament last August 17. And despite the MEA’s meretricious faith in addressing India’s concerns through the 123 agreement, Boucher has just testified that it will be “a standard bilateral agreement” as required by US law.
To strengthen its negotiating leverage, the government needs to concede a role for Parliament. It hardly redounds to the credit of the world’s largest democracy that its Parliament has yet to carefully scrutinize a deal that not only centres on the very future of the country’s nuclear programme, but also has divided India like no other issue in modern times. In contrast, the US Congress will have a second shot at scrutinizing and approving the deal in its final form. 
The 123 agreement, when ready, will be signed by an Indian bureaucrat, like the last 123 accord in 1963. It will not be submitted to Parliament for vetting, let alone for approval, but the US legislature will examine it minutely and have the right to attach conditions to its entry-into-force. If Dr. Singh were to agree to place the 123 accord before Parliament for scrutiny and a no-vote debate, he would only strengthen his own hands.
More broadly, a smart Indian strategy would be to drag out the negotiations into the next decade. That way India will still enjoy the main benefit of the deal without having to meet grating conditions to earn a dubious right to import power reactors. 
Like a blue chip in a soaring stock market, a rising India’s stock and influence are bound to soar internationally in the coming years, strongly positioning New Delhi to conclude a deal on terms that are fairer and more balanced than on offer today. Its interests also demand a deal encompassing not just civil nuclear export controls but the full range of dual-use technology controls in force against it.
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