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Full official text and key features of U.S.-India reprocessing agreement

Posted on March 30, 2010 by Chellaney

Reprocessing-related arrangements and procedures agreed between the United States and India

KEY FEATURES:

►The actual implementation of the agreement is years away, even though U.S.-origin spent fuel has been accumulating in India for nearly 40 years at the U.S.-built Tarapur nuclear power station near Mumbai. India will not be able to reprocess that spent fuel until it has built at least one new dedicated reprocessing facility — a process that will take a number of years. Article 1(3) specifies that the U.S. consent relates to “two new national reprocessing facilities established by the Government of India.” Only in those new facilities, approved by the IAEA, can India reprocess the discharged fuel under international inspection. Any additional reprocessing facility can be added only with prior U.S. agreement.

►The United States has retained the right to unilaterally suspend the grant of reprocessing consent to India. This is an extension of its right, incorporated in the 123 bilateral agreement, to unilaterally suspend or terminate fuel supply or all civil nuclear cooperation with India. In fact, that is exactly what the United States did in the mid-1970s under its previous 123 agreement with India dating back to 1963. As a result of that action, the twin-reactor Tarapur plant was left high and dry. In the newest 123 agreement, the U.S. has retained the legal right to unilaterally terminate cooperation but has provided political assurances to India that such a right will be exercised only in extraordinary circumstances. A similar approach is mirrored in the reprocessing accord.

Under Article 7 of the reprocessing accord, the reprocessing consent can be suspended on grounds of “national security” or a “serious threat to the physical protection of the facility or of the nuclear material at the facility,” and if the party determines “that suspension is an unavoidable measure.” So the U.S. right to suspend reprocessing consent in unfettered. Still, the agreement’s Article 7 and the accompanying Agreed Minute record political assurances to India that such a right shall be exercised only in special circumstances and after careful thought. But such assurances can hold little value when the legal right to suspend reprocessing consent is explicitly recorded in the text.

It is noteworthy that the U.S. has retained the right to suspend all cooperation with India, including the withdrawal of reprocessing consent, if India were to carry out a nuclear test. The assurances that have been recorded relate only to "peaceful" nuclear activities and fuel choices by India. For example, the Agreed Minute states that the reference to “serious national security concerns” as a basis for suspension of reprocessing consent shall not mean or be the basis for "addressing differences between the parties on the nature of peaceful nuclear activities," or "addressing differences with regard to fuel cycle choices," or "the purpose of securing commercial advantage," or "the purpose of delaying, hampering or hindering peaceful nuclear activities of the other party." The United States thus can continue to hold India to a no-test obligation.

►Another feature of the agreement is that it amplifies India’s reprocessing obligations with the IAEA, including to provide facility-design information in advance and to allow unhindered international monitoring and verification (Article 2). But in addition, the accompanying Agreed Minute obligates India to permit U.S. “consultations visits” to each dedicated reprocessing facility. Every “visiting team of not more than 10 persons” will be permitted on-site access “at a time and duration mutually agreed by the parties.”

►The agreement relates only to U.S. reprocessing consent, not to transfer of reprocessing technology and equipment. Unlike America’s arrangements with Japan and Euratom, the arrangements with India (as reflected in the 123 bilateral agreement and the domestic Hyde Act) exclude transfer of enrichment and reprocessing technology even under international safeguards.

►The agreement does not provide for an international arbitral tribunal to resolve any differences or disputes — a provision found in the U.S.-Japan arrangements. It only provides for bilateral consultations — a mechanism where the cards will be stacked in favor of the supplier state and against the recipient state. Any compensation payable to India for a unilateral U.S. suspension of reprocessing consent will depend entirely on American willingness to do so. The agreement states that, "In case the suspension extends beyond a period of six months, both parties shall enter into consultations on compensation for the adverse impact on the Indian economy due to disruption in electricity generation and loss on account of disruption of contractual obligations." So, the agreement is to "consult" over compensation, not to actually compensate India. If the U.S. eventually agrees to pay any compensation, the amount will be determined by it.

►India’s obligations remain in perpetuity. U.S. suspension of reprocessing consent will not free India of any of its obligations under the 123 agreement. This is recorded in Article 7(8). That, again, is an extension of what the 123 agreement states explicitly.

►The agreement employs the term, "U.S.-obligated," instead of "U.S.-origin," nuclear material to help broaden coverage. Because U.S.-built reactors and the dedicated reprocessing facilities would be both under IAEA safeguards, India could — in the event the U.S. cut off fuel supply and suspended reprocessing consent — use other foreign-origin fuel to run those plants and then reprocess their discharged fuel. To preclude that possibility, the term, "U.S.-obligated," has been used in the reprocessing agreement to include the use of both U.S.-origin reactors and U.S.-origin fuel. So, if the U.S. were to suspend its fuel shipments and reprocessing consent, India would not be able to reprocess spent fuel of other foreign origin. That helps increase the costs for India of any suspension.

In sum, India has a deal under which it got no legally binding fuel-supply guarantee to avert a Tarapur-style fuel cut-off; no irrevocable reprocessing consent; and no right to withdraw from its obligations under any circumstance, although the U.S. has reserved the right for itself to suspend or terminate the arrangements if it holds India not to be in compliance with the stipulated terms. Moreover, the continuation of the deal will hinge on India not conducting a nuclear test ever again. These are the four "no"s embedded in the deal.

In fact, this is the first case in world history where one nuclear-weapons state has used a civilian cooperation deal to impose a weapons-related prohibition on another nuclear-weapons state, which has only a rudimentary nuclear military capability. It is apparent that chances are virtually zero of India ever becoming a nuclear-weapons power in the same league as China, the U.S., Britain, France and Russia, in terms of having an intercontinental-range thermonuclear capability. India, at best, can be a second-tier nuclear-weapons state that in due course would, hopefully, develop sufficient but regionally-confined nuclear capability to deter its main security challenge, China.

As far as the reprocessing accord is concerned, the U.S. has got what it wanted. For example, the State Department had earlier notified Congress in writing that “the proposed arrangements and procedures with India will provide for withdrawal of reprocessing consent” by the U.S. That is exactly what the text of the accord provides. Also by providing for U.S. “consultations visits,” the accord effectively permits IAEA-plus inspections.

That means the U.S. Congress is unlikely to exercise the right to reject the reprocessing accord through a joint resolution of disapproval passed by both chambers — a high bar in any case. Section 201 (titled "Procedures Regarding a Subsequent Arrangement on Reprocessing") of the U.S. legislation ratifying the nuclear deal with India, the 2008 United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act, reads as follows:

(a) In General- Notwithstanding section 131 of the Atomic Energy Act of 1954 (42 U.S.C. 2160), no proposed subsequent arrangement concerning arrangements and procedures regarding reprocessing or other alteration in form or content, as provided for in Article 6 of the Agreement, shall take effect until the requirements specified in subsection (b) are met.

(b) Requirements- The requirements referred to in subsection (a) are the following:

(1) The President transmits to the appropriate congressional committees a report containing–

(A) the reasons for entering into such proposed subsequent arrangement;

(B) a detailed description, including the text, of such proposed subsequent arrangement; and

(C) a certification that the United States will pursue efforts to ensure that any other nation that permits India to reprocess or otherwise alter in form or content nuclear material that the nation has transferred to India or nuclear material and by-product material used in or produced through the use of nuclear material, non-nuclear material, or equipment that it has transferred to India requires India to do so under similar arrangements and procedures.

(2) A period of 30 days of continuous session (as defined by section 130 g.(2) of the Atomic Energy Act of 1954 (42 U.S.C. 2159 (g)(2)) has elapsed after transmittal of the report required under paragraph (1).

(c) Resolution of Disapproval- Notwithstanding the requirements in subsection (b) having been met, a subsequent arrangement referred to in subsection (a) shall not become effective if during the time specified in subsection (b)(2), Congress adopts, and there is enacted, a joint resolution stating in substance that Congress does not favor such subsequent arrangement. Any such resolution shall be considered pursuant to the procedures set forth in section 130 i. of the Atomic Energy Act of 1954 (42 U.S.C. 2159 (i)), as amended by section 205 of this Act.

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FULL OFFICIAL TEXT: "Arrangements and Procedures Agreed Between the Government of the United States and the Government of India, Pursuant to Article 6(iii) of Their Agreement for Cooperation Concerning Peaceful Uses of Nuclear Energy" (text released on March 29, 2010)

The Government of the United States of America and the Government of India (hereinafter “the Parties”), pursuant to the Agreement for Cooperation Concerning Peaceful Uses of Nuclear Energy, with Agreed Minute, signed at Washington, on October 10, 2008 (“the Agreement for Cooperation”), which entered into force on December 6, 2008.

CONSIDERING the commitment to full civil nuclear cooperation between the two countries in the peaceful uses of nuclear energy as noted in Article 6 of the Agreement for Cooperation;

NOTING that cooperation under the Agreement for Cooperation is between two States possessing advanced nuclear technology, both Parties having the same benefits and advantages, both committed to preventing WMD proliferation;

DESIRING to implement the provisions of Article 6(iii) of the Agreement for Cooperation concerning arrangements and procedures for the reprocessing or other alteration in form or content of nuclear material transferred pursuant to the Agreement for Cooperation and nuclear material and by-product material used in or produced through the use of nuclear material, non-nuclear material, or equipment so transferred;

NOTING that the “Agreement between the Government of India and the International Atomic Energy Agency for the Application of Safeguards to Civilian Nuclear Facilities” (INFCIRC/754)(“India-Specific Safeguards Agreement”), which provides for safeguards on reprocessing plants, entered into force on May 11, 2009;

Have agreed on the following arrangements and procedures under which such reprocessing or other alteration in form or content may take place in India at two new national reprocessing facilities dedicated to reprocessing safeguarded nuclear material under International Atomic Energy Agency (“IAEA”) safeguards, including future expansion, modifications, renovations or additions thereto;

ARTICLE 1 – NOTIFICATION AND EFFECTIVENESS OF RIGHT TO REPROCESS

1. The Government of India shall notify the Government of the United States of America in writing that it has established a facility (“the Facility”). The notification shall contain:

a. the name of the owner or operator of the Facility;

b. the name, type and location of the Facility and its planned capacity;

c. confirmation that pursuant to Paragraph 14(a) of the India-Specific Safeguards Agreement, as referenced in Article 10(2) of the Agreement for Cooperation, India has notified the Facility to the IAEA for application of IAEA safeguards and that relevant safeguards arrangements have been agreed pursuant to the India-Specific Safeguards Agreement with the IAEA;

d. such information as is available to the Government of India on the IAEA safeguards approach that is not classified as “Safeguards Confidential”; and

e. a confirmation that physical protection measures as required by Article 8 of the Agreement for Cooperation will be applied at the Facility.

Both Parties confirm that the provisions of this Article or any subsequent Article of these Arrangements and Procedures shall not be used to secure any proprietary or commercially sensitive information about the Facility.

2. The Government of the United States of America shall provide an acknowledgement to the Government of India no later than thirty days after receipt of the notification. This acknowledgement shall be limited to a statement that the notification has been received.

3. It is understood that the phrase “the Facility” throughout these Arrangements and Procedures is intended to refer to two new national reprocessing facilities established by the Government of India to reprocess U.S.-obligated nuclear material and any other safeguarded nuclear material and dedicated to the reprocessing and, as required, other alteration in form or content of safeguarded nuclear material under IAEA safeguards, as well as any additional new national facilities established and agreed to in accordance with paragraph 4 of this Article.

4. The Government of the United States of America and the Government of India understand the need for sufficient indigenous Indian capacity to reprocess or otherwise alter in form or content, under IAEA safeguards, U.S.-obligated nuclear material subject to the Agreement for Cooperation. Based on this understanding, the Parties agree to pursue the steps necessary, consistent with their national laws, to permit reprocessing or alteration in form or content of nuclear material subject to the Agreement for Cooperation at one or more new additional national facilities in India, (beyond the two facilities provided for in these Arrangements and Procedures) established by the Government of India and dedicated to the reprocessing and, as required, other alteration in form or content of safeguarded nuclear material under IAEA safeguards. These Arrangements and Procedures shall apply to such facilities upon successful completion of these steps, unless otherwise agreed by the Parties.

ARTICLE 2 – IAEA SAFEGUARDS

1. Consistent with the provisions of the Agreement for Cooperation, the Government of India shall offer the Facility for the application of IAEA safeguards as per the provisions of the India-Specific Safeguards Agreement. For the timely detection of withdrawal of safeguarded nuclear material from civilian use, safeguards measures shall include, as specified by the India-Specific Safeguards Agreement, nuclear material accountancy, design review, verification, progress in construction, appropriate containment and surveillance systems, process monitoring and other measures as may be agreed with the IAEA.

2. The Government of India shall ensure that the following minimum requirements, consistent with paragraph 37 of the India-Specific Safeguards Agreement, for the implementation of IAEA safeguards at the Facility are fulfilled:

a. Facility Design

i. Early Provision of Design Information.

The operator of the Facility shall co-operate with the IAEA by providing design information at the earliest possible time as provided in Paragraph 40 of the India-Specific Safeguards Agreement.

ii. Effective Design Review.

India and the operator of the Facility, as appropriate, shall cooperate with the IAEA in allowing “design information verification” (DIV) activities.

iii. Incorporation of Design Features that Facilitate Safeguards.

As may be required by the IAEA, facility design and operational characteristics shall enable effective and efficient implementation of safeguards while precluding design features that would prevent the effective application of safeguards. Examples include, but are not limited to: installation of vessel calibration systems; effective methods of solution mixing and sampling; and installation of independent instruments as dictated by authentication concerns.

b. Safeguards System Design and Installation

i. Cooperation with the IAEA.

The Facility operator and the Safeguards Implementing Agency of the Government of India (hereinafter referred to as the Indian SIA) shall accommodate the installation and operation of IAEA instrumentation in the Facility, including data collection, authentication systems and tamper-indicating devices.

ii. System of Accounting and Control Capable of Providing Accurate, Timely Data.

The operator of the Facility and the Indian SIA shall maintain a comprehensive and accurate nuclear materials accountancy system that conforms to IAEA standards as per the provisions of the India-Specific Safeguards Agreement, so that reliable and timely declarations can be made to the IAEA. A system of inventory records and reports shall be maintained for each material balance area. An effective system for measurement control shall be utilized.

iii. In-Process Material Measurement.

The Facility operator and the Indian SIA shall cooperate with the IAEA to enable the IAEA to provide at the Facility measurement capabilities that the IAEA considers as necessary to cover all major in-process nuclear material inventories during plant operation.

iv. Process Monitoring Data.

If desired by the IAEA, the Facility operator shall provide to the IAEA access to safeguards relevant operator data, such as authenticated process control data as per the provisions of the India-Specific Safeguards Agreement and India’s Additional Protocol when in force.

v. On-site Laboratory.

The Facility design shall incorporate an on-site laboratory, if IAEA so requests, to perform destructive analysis of process samples required by the IAEA safeguards approach at the Facility, and the IAEA shall be permitted to set up and operate that laboratory.

vi. Containment and Surveillance Systems.

The Facility design shall take into account the use of containment and surveillance systems in accordance with the IAEA’s practices and procedures, as required for the effective implementation of safeguards, and the IAEA shall be permitted to maintain such systems at the Facility.

c. Safeguards Implementation

i. Verification of Accountancy of Records.

The IAEA shall be permitted to carry out regular verification of nuclear material accountancy records and reports.

ii. Remote Data Transmissions.

The IAEA, if it considers it efficient for the purpose of safeguards implementation, may use remote transmission, in accordance with the provisions of India’s Additional Protocol when in force, of authenticated data to enable more frequent data analysis.

iii. Data Authentication.

The Parties recognize the importance of reliable instrumentation for the purpose of timely and accurate safeguards related data, and of data authentication for safeguards implementation. The Facility operator shall cooperate with the IAEA to apply adequate authentication methods to data and samples collected for safeguards purposes.

iv. Access and Transparency.

The Facility operator and the Indian SIA shall provide sufficient access to IAEA Inspectors to install and maintain safeguards equipment, and to inspect the complete process activity of the operator (including sample-taking) to the extent required for safeguards implementation and maintain a complete understanding of plant operation.

v. Annual Cleanout Inventory.

Nuclear material shall be removed from process lines annually in order to make it available, to the extent practicable, for accurate physical inventory verification.

vi. Anomaly Resolution.

The operator of the Facility and the Indian SIA shall cooperate with IAEA inspectors to resolve anomalies, if any, including material accounting anomalies, in a timely fashion.

ARTICLE 3 – CONSULTATION

The Parties undertake to consult at the request of either Party regarding the implementation of these Arrangements and Procedures.

ARTICLE 4 – PHYSICAL PROTECTION AND STORAGE AT THE FACILITY

1. In implementing physical protection at the Facility, and to the spent fuel and separated special fissionable material at the Facility, the Government of India shall apply measures in accordance with (i) levels of physical protection at least equivalent to the recommendations published in the IAEA document INFCIRC/225 Rev. 4 entitled “The Physical Protection of Nuclear Material and Nuclear Facilities,” and in any subsequent revisions of the document agreed to by the Parties, and (ii) the provisions of the 1980 Convention on the Physical Protection of Nuclear Material and any amendments to the Convention that enter into force for both Parties.

2. The Parties agree to exchange information on the approach to implementation of the requirements of this Article. The Parties shall also hold consultations visits at the Facility with respect to U.S.-obligated nuclear material in accordance with paragraph I of the Agreed Minute.

3. Any information provided by the Government of India pursuant to this Article that is classified shall be protected in accordance with Article 8 of these Arrangements and Procedures.

ARTICLE 5 – ENVIRONMENTAL PROTECTION

The Government of India shall follow best practices, as established in its national regulations, for minimizing the impact on the environment which may arise from the operation of the Facility.

ARTICLE 6 – MANAGEMENT OF SAFEGUARDED SEPARATED PLUTONIUM

India is committed to the management of separated safeguarded plutonium in ways that are consistent with its national decisions on the civil nuclear fuel cycle. The management of separated safeguarded plutonium subject to these Arrangements and Procedures by the Government of India shall take into account the need to avoid contributing to the risks of nuclear proliferation; the need to protect the environment, workers and the public; the potential of the material for further energy generation; and the importance of balancing supply and demand, including demand for reasonable working stocks for civil nuclear operations.

ARTICLE 7 – SUSPENSION OF ARRANGEMENTS AND PROCEDURES

1. The Parties note the significance of the full and continued implementation of these Arrangements and Procedures concluded pursuant to Article 6(iii) of the Agreement for Cooperation for implementing full civil nuclear cooperation as envisioned in the Joint Statement of the Parties of July 18, 2005. The Parties recognize that these Arrangements and Procedures should facilitate and ensure the development of further cooperation in the field of peaceful uses of nuclear energy on a stable, reliable and predictable basis. The Parties have also agreed to take into account the effects of suspension of these Arrangements and Procedures on other aspects of cooperation under the Agreement for Cooperation.

2. The Government of India may undertake a temporary pause of limited duration in

operations at the Facility if in its view such an action is required on account of

specific circumstances regarding the Facility that may have an impact on the

safe and secure operation of the Facility, the continued application of IAEA

safeguards or physical protection measures, or the safety of personnel working in it or to the population in surrounding areas. The Government of India has the right to resume operations at the Facility when it decides that the specific circumstances that led to the temporary pause in operations no longer exist.

3. The Parties agree that the sole grounds for seeking suspension, under Article 14(9) of the Agreement for Cooperation, are exceptional circumstances limited to:

i) Either Party’s determination that continuance of reprocessing of U.S.-obligated nuclear material at the Facility would result in a serious threat to that Party’s national security, consistent with the Agreed Minute to these Arrangements and Procedures, or serious threat to the physical protection of the Facility or of the nuclear material at the Facility, and

ii) Either Party’s determination that suspension is an unavoidable measure.

4. Recognizing the critical importance of a decision to seek suspension, such a decision shall only be taken at the highest level of Government. As provided in Article 14(9) of the Agreement for Cooperation, the Party seeking suspension shall take into account the effects of such suspension on other aspects of cooperation under the Agreement for Cooperation. The Party seeking suspension shall also consider the effects of such suspension in light of the commitments and objectives, including full civil nuclear cooperation, contained in the U.S.-India Joint Statement of July 18, 2005.

5. The two Parties recognize that any suspension of these Arrangements and Procedures would have profound implications for the Agreement for Cooperation and for their relations. As such the two Parties shall exercise due restraint and caution before seeking suspension of these Arrangements and Procedures and shall use the provisions for consultations provided in Article 13 of the Agreement for Cooperation and in this Article. Such consultations shall also give special consideration to the importance for India of uninterrupted operation of nuclear reactors that provide nuclear energy for peaceful purposes and potential loss to the Indian economy and impact on energy security caused by a suspension of these Arrangements and Procedures. Both Parties shall take into account any negative consequences of such suspension on cooperation under the Agreement for Cooperation, including on-going contracts and projects initiated under the Agreement of Cooperation.

6. Subsequent to the above consultations, if either Party determines that exceptional circumstances do exist and that these Arrangements and Procedures should be suspended pursuant to Article 14(9) of the Agreement for Cooperation, that Party shall notify the other Party in writing providing reasons for the suspension. The Parties confirm that, as of the time of entry into force of these Arrangements and Procedures, there exists no objective evidence of any of the concerns specified in paragraph 3 of this Article.

7. Any decision to invoke the provisions of Article 14(9) of the Agreement for Cooperation shall be applied to the relevant reprocessing facility related to the exceptional circumstances to the minimum extent and for the minimum period of time necessary to deal with the exceptional circumstances and for not longer than a three month period unless extended by the Party seeking suspension for specific reasons conveyed in writing to the other Party. Both Parties shall review at the highest levels of Government, within three months from the commencement of the suspension, measures taken by the Parties aimed at reaching mutually acceptable resolution of outstanding issues, and steps taken to promote the earliest possible revocation of suspension, taking into account the effects of continuation of suspension on other aspects of cooperation under the Agreement for Cooperation. In case the suspension extends beyond a period of six months, both Parties shall enter into consultations on compensation for the adverse impact on the Indian economy due to disruption in electricity generation and loss on account of disruption of contractual obligations. The suspending Party shall notify the other Party in writing of a decision to end the suspension.

8. In the event of suspension of these Arrangements and Procedures the rights and obligations of the Parties under Article 14 of the Agreement for Cooperation shall remain unaffected.

ARTICLE 8 – CONFIDENTIALITY

1. If the Government of India, in carrying out its obligations under Articles 1(1)(e) and 4 of these Arrangements and Procedures, provides to the Government of the United States of America classified information concerning the physical protection of the Facility or nuclear material at the Facility, the Government of the United States of America shall protect that classified information against unauthorized disclosure in accordance with the terms set forth below and in accordance with the laws and regulations of the Government of the United States of America.

2. For purposes of these Arrangements and Procedures, “classified information” shall mean information provided by the Government of India pursuant to Articles 1(1)(e) and 4: (i) concerning the physical protection of the Facility or nuclear material at the Facility, the unauthorized disclosure of which could jeopardize the physical protection of the Facility or the material; (ii) which requires protection against unauthorized disclosure in the security interest of the Government of India; and (iii) which bears a security classification assigned by the Government of India. Classified information provided by the Government of India to the Government of the United States of America under these Arrangements and Procedures shall be marked by the Government of India in English as RESTRICTED, CONFIDENTIAL or SECRET.

3. Equivalent classifications are as follows:

INDIA UNITED STATES OF AMERICA

SECRET SECRET

CONFIDENTIAL CONFIDENTIAL

RESTRICTED CONFIDENTIAL (modified handling authorized)

4. To the extent consistent with its applicable national law and regulations, the Government of the United States of America shall seek to ensure that all classified information that is provided to the Government of the United States of America by the Government of India under these Arrangements and Procedures will not be publicly disclosed, and shall seek to accord appropriate protections to such classified information, with a view to providing the same level of protection as is accorded to such classified information by the Government of India. The Parties shall consult regarding the appropriate protection of such classified information.

ARTICLE 9 – INTERPRETATION

1. These Arrangements and Procedures are not intended to and shall not be interpreted to affect the terms of the Agreement for Cooperation, and in the case of any conflict between these Arrangements and Procedures and the Agreement for Cooperation, the terms of the Agreement for Cooperation shall prevail.

2. Terms used in these Arrangements and Procedures shall have the same meaning as given in the Agreement for Cooperation unless otherwise specified.

ARTICLE 10 – ENTRY INTO FORCE

These Arrangements and Procedures shall enter into force on the date on which the Parties exchange diplomatic notes informing each other that they have completed all applicable requirements for entry into force.

IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed these Arrangements and Procedures.

Done at __________________this ________day of ____________ 20__, in duplicate.

FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA:

FOR THE GOVERNMENT OF INDIA:

Agreed Minute

During the negotiations of the Arrangements and Procedures agreed between the Government of the United States of America and the Government of India pursuant to Article 6(iii) of their Agreement for Cooperation Concerning Peaceful Uses of Nuclear Energy (“the Arrangements and Procedures”) signed today, the following understandings, which shall be an integral part of the Arrangements and Procedures, were reached.

I. PHYSICAL PROTECTION AND STORAGE AT THE FACILITY

i) A consultations visit under Article 4.2 shall be held within six months of the initial commencement of operations at the Facility and thereafter once in every subsequent five year period. In special cases, consultations visits can also be undertaken by mutual agreement between the Parties.

ii) The purpose of the consultations visits is to provide an opportunity for both Parties to exchange views on the implementation of physical protection measures as specified in Article 4.1 as well as exchange of information on international best practices with respect to physical protection.

iii) During the consultations visits the following activities shall be permitted:

a. Initial meeting between the visiting team of not more than ten persons and the designated authorities of the Facility;

b. Observe the protected area perimeter and its access control points;

c. Visit to the central alarm station;

d. A pre-exit meeting between the visiting team and the designated authorities of the Facility to prepare and finalize a confidential joint report on the visit to the Facility.

iv) The consultations visits shall be:

a. undertaken to the Facility at a time and duration mutually agreed by the Parties taking into account paragraph (i) above;

b. Addressed in accordance with Article 12.3 of the Agreement for Cooperation.

c. Conducted in a manner consistent with the national laws and safety and security regulations in force and without causing hindrance to smooth operations at the Facility. Access within the Facility shall be restricted as appropriate by the designated authorities of the Facility in order to protect sensitive locations and equipment at the Facility as well as sensitive information. The use of equipment by the visiting team shall not be permitted.

II. Article 7: SUSPENSION OF ARRANGEMENTS AND PROCEDURES

The Parties, taking into account their relations of strategic partnership and the objectives and purposes of the Agreement for Cooperation, agree that with respect to implementation of Article 7:

i) the reference to “serious national security concerns” shall not mean or be the basis for:

a. addressing differences between the Parties on the nature of peaceful nuclear activities of either Party or activities covered by Article 2.4 of the Agreement for Cooperation;

b. addressing differences with regard to fuel cycle choices;

c. the purpose of securing commercial advantage; or

d. the purpose of delaying, hampering or hindering peaceful nuclear activities of the other Party.

ii) Suspension of the Arrangements and Procedures means suspension of reprocessing of U.S.-obligated nuclear material at the Facility.

iii) Suspension of operation of the Facility or part thereof by the Facility operator shall be in accordance with operating procedures so as not to jeopardize the safety, early resumption of operation of the Facility, and its continued operation in the future. Operations at the Facility with regard to non-U.S.-obligated nuclear material shall not be affected by suspension under Article 7. With respect to U.S.-obligated nuclear material, the principle of proportionality as included in the Agreed Minute of the Agreement for Cooperation shall apply.

FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA

FOR THE GOVERNMENT OF INDIA

Ensuring resource security: From a local problem to a global challenge

Posted on March 30, 2010 by Chellaney

Why Precious Is Strategic

Increasingly, ensuring resource security will go from being a local problem to a global problem

Brahma Chellaney

The Times of India, March 30, 2010

Water, food, energy and minerals are highly strategic resources. They are essential to human development and, in the case of water and food, to human survival. Food production is, meanwhile, closely intertwined with water and energy, while water and energy, for their part, are intimately linked to climate change. While the way we produce and consume energy makes up about two-thirds of all human-induced greenhouse gases, the availability of water resources will be directly affected by global warming.

Growing populations, rising affluence, changing diets and the demands of development have already, however, placed significant pressure upon these strategic resources. The global food system is already struggling to meet the present demand for food, yet the World Bank projects a rise of 50 per cent in global demand for food by 2030. To grow more food will require more water – a resource now also under great strain, as pollution is threatening the world’s freshwater resources.

The 2030 Water Resources Group, a consortium of private-social sector organisations, has pointed to a growing "water gap" in which global demand for water will be 40 per cent more than supply by 2030. Today, agriculture alone accounts for approximately 3,100 billion cubic metres or 71 per cent of global water withdrawals; by 2030, without water-efficiency gains, such withdrawals will increase to 4,500 billion m3. Water withdrawals by industry are projected to rise from 16 per cent of today’s global demand to 22 per cent in 2030, with the greatest growth in use coming from China, the world’s factory.

As for energy, the imperative to combat global warming goes against the current trends of rising consumption of energy, much of it produced with fossil fuel. Such is Asia’s appetite for energy that its share of global consumption is projected to almost double over the next 20 years – to about 48 per cent for oil and 22 per cent for natural gas. Yet, given its limited oil and gas reserves, Asia is particularly vulnerable to sudden supply shortage or disruption.

A further aspect regarding competition over resources is the intensification of resource geopolitics. Europe, for example, has worked hard to shape the direction of some of the Caspian Basin and Central Asian oil and gas pipelines because it has a stake in the issue of the routing. If Central Asian and Caspian Sea energy supplies are routed to the European market, that would help Europe diversify its imports and ease its dependence on Russia.

Within Asia, China has emerged as a key player in pipeline politics. Beijing has built its own pipeline to bring oil from Kazakhstan and is seeking two gas pipelines from Russia. These pipelines are a lynchpin of China’s strategy to diversify its imports away from over-reliance on the volatile Persian Gulf region, the current source of more than half of Chinese overseas purchases. In contrast, energy-poor India and Japan do not have a similar option. Lacking geographical contiguity with Central Asia and Iran, India will remain largely dependent on oil imports by sea from the Persian Gulf region.

China, with the world’s most resource-hungry economy, fears that in the event of a strategic confrontation, its economy could be held hostage by hostile naval forces through the interdiction of its oil imports. That same concern has prompted Beijing to build a strategic oil reserve, and China is now seeking to fashion two strategic corridors in southern Asia through which it could transfer Persian Gulf and African oil for its consumption by cutting the transportation distance and minimising its exposure to US-policed sea lanes.

The new Chinese-built port at Gwadar, Pakistan, represents China’s first strategic foothold in the Arabian Sea. Gwadar, at the entrance to the Strait of Hormuz, will link up with the Trans-Karakoram corridor to western China. China is also establishing a similar energy corridor through Myanmar.

The blunt and incontrovertible truth is that energy demands in Asia are beginning to influence strategic thinking and military planning. For some states, a rising dependence on oil imports has served to rationalise both a growing emphasis on maritime power and security as well as a desire to seek greater strategic space. Concerns over sealane safety and rising vulnerability to disruption of energy supplies are prompting some countries to explore avenues for joint cooperation in maritime security.

Water presents a unique challenge. While countries can scour the world for oil, natural gas and minerals to keep their economic machines humming, water cannot be secured through international trade deals. Sustainable and integrated management of national water resources is essential to prevent degradation, depletion and pollution of water. To meet the gap between supply and demand, water conservation, water efficiency, rainwater capture, water recycling and drip irrigation would have to be embraced at national, provincial and local levels.

One can hope that advances in clean-water technologies would materialise before water conflicts flare. Low-cost, energy-efficient technologies for treating and recycling water could emerge from the scientific progress on nanoparticles and nanofibres and membrane bioreactors.

The writer is professor of strategic studies at the Centre for Policy Research, New Delhi.

Source: the Foresight Initiative.

India’s Civil Liability for Nuclear Damage Bill

Posted on March 12, 2010 by Chellaney

A radioactive Bill fraught with big risks

The Civil Liability for Nuclear Damage Bill seeks to burden the Indian taxpayer and encumber the rights of victims of any potential radioactive release from a foreign-built plant.

BRAHMA CHELLANEY

The Hindu, March 13, 2010 [For full text of the Bill, click http://ow.ly/1jRas]

The government has finally released the text of its controversial nuclear-accident liability Bill. The text not only confirms the concerns expressed earlier over key elements of the proposed law, but also raises additional issues of worry.

What stands out in the Civil Liability for Nuclear Damage Bill is the extent to which it goes to aid the business interests of the foreign reactor builders. In the process, the Bill seeks to financially burden the Indian taxpayer and encumber the rights of victims of any potential radioactive release from a foreign-built plant.

A special Indian law limiting liability in amount and in time has been sought by Washington for its nuclear-exporting firms, with the largest two, Westinghouse and General Electric (GE), set to win multibillion-dollar contracts to build several commercial nuclear power reactors. To forestall lawsuits filed against American suppliers in U.S. courts by victims of a nuclear catastrophe, Washington has also pressed for exclusive jurisdiction for Indian courts so that there will be no repeat of what happened after the Bhopal gas disaster. The Bill seeks to help out the U.S. firms on these counts, going at times even beyond what American law provides.

Under the Bill, the foreign reactor builder — however culpable it is for a nuclear accident — will be completely immune from any victim-initiated civil suit or criminal proceedings in an Indian court or in a court in its home country. The Bill actually turns the legal liability of a foreign reactor supplier for an accident into mere financial compensation — that too, pegged at a pittance and routed through the Indian state operator of the plant. Foreign suppliers will have no direct accident-related liability.

The foreign builders will bask under legal immunity because the Bill channels all legal liability to the Central Government. Clause 7 states the “Central Government shall be liable for nuclear damage in respect of a nuclear incident” when such liability exceeds the Rs.500-crore liability limit of the operator or where the accident occurs “in a nuclear installation owned by it [the Indian government].” The Union government will own all foreign-built reactors.

Indeed, the Bill creates a specious distinction between the operator and the government when both are fused in the Indian context. After all, it is the Indian state which will run all foreign-built plants through its operator, the Nuclear Power Corporation of India Limited (NPCIL). Yet, throughout the Bill, the pretence of a U.S.-style separation between the operator and the government is maintained.

Under Clause 6, the maximum liability of the operator and the government combined has been set at “the rupee equivalent of 300 million special drawing rights (SDRs),” or Rs.2,087 crore ($458 million) — 23 times lower than the private-sector funds available under the equivalent U.S. law, the controversial Price-Anderson Act (labelled “Half-Price Anderson” by critics). Of this, the total liability of the operator has been limited to Rs.500 crore ($109 million). The Central government will be liable for damages in excess of Rs.500 crore but only up to Rs.2,087 crore.

In actual fact, all liability falls on the Indian taxpayer, whether it is the operator’s slice or the Central government’s portion. In contrast, the Price-Anderson system is without cost to the American taxpayer. In fact, the U.S., like Germany or Finland, has no cap on accident liability, with the U.S. Congress serving as the insurer of last resort.

The Indian state operator, the NPCIL, through a construction contract, can make the foreign builder legally responsible to pay compensation for an accident. But the amount payable by a foreign builder can only be up to the state operator’s own liability ceiling, which is a trifling Rs.500 crore ($109 million).

So, even if the accident were triggered by wilful negligence on the part of the foreign supplier and the consequences were catastrophic, all claims would have to be filed against the Indian state — with the NPCIL required to disburse the first Rs. 500 crore and the Central government the second portion up to Rs. 2,087 crore. The NPCIL could, in turn, try to recover its Rs. 500 crore from the foreign supplier. But for the Indian taxpayer, this is a lose-lose proposition.

That raises a fundamental question: What will it do to nuclear safety to grant foreign suppliers legal immunity upfront and to shift the liability to the Indian taxpayer?

Another key issue relates to the rights of victims. The Bill ensures that victims of a disaster involving a foreign-built reactor will not be able to sue the builder in its home country. Worse still, the Bill blocks the victims from suing the foreign supplier even in Indian courts.

Only the “operator shall have a right of recourse,” according to Clause 17. The state operator can sue the foreign supplier where “such right is expressly provided for in a contract in writing” and “the nuclear incident has resulted from the wilful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee.” But such a right of recourse can only be to meet the operator’s own small liability of Rs. 500 crore.

In fact, the Bill seriously shackles Indian courts. All nuclear-damage claims will be dealt with by a Claims Commissioner or a Nuclear Damage Claims Commission, and any award made “shall be final” and cannot be appealed in any court. “No civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter which the Claims Commissioner or the Commission, as the case may be, is empowered to adjudicate under this Act and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act,” according to Clause 35.

By contrast, the Price-Anderson Act permits economic (but not legal) channelling of liability, thereby allowing lawsuits and criminal proceedings against the reactor builder or any other party in U.S. courts. That is a key reason why the U.S. has not joined the Vienna or Paris convention — the two main international liability instruments. But the U.S. has become party to another convention it helped draft under the auspices of the IAEA — the Convention on Supplementary Compensation (CSC), which is still not in force. The CSC, as the name suggests, is about compensation through an international fund, to be paid “supplementary” to the liability limit.

The Bill also limits liability in time, with Clause 18 stating: “The right to claim compensation for any nuclear damage caused by a nuclear incident shall extinguish if such claim is not made within a period of 10 years from the date of incident…” That provision was retained despite the Environment Ministry’s note of caution — revealed by this newspaper — that the 10-year time limit was untenable because damage to human health from a serious radioactive release “involves changes in DNAs, resulting in mutagenic and teratogenic changes, which take a long time to manifest.”

And although the Finance Ministry, in its comments on the Bill, had warned the proposed law would “expose the government to substantial liabilities for the failings of the private sector,” the Bill essentially seeks to give foreign reactor builders a free ride at the Indian taxpayer’s expense.

The Indian Bill, in effect, amounts to a huge hidden subsidy by protecting foreign reactor builders from the weight of the financial consequences of accidents. If the Bill is passed, the costs of doing business in India for foreign suppliers will be low but the assured profits will be high. To cover the maximum potential compensation payable for an accident, a foreign builder will need to take insurance for a mere Rs. 500 crore. What is more, the foreign builders are being freed from the task of producing electricity at marketable rates. The NPCIL will run the foreign-built reactors, with the state subsidising the high-priced electricity generated.

India is under no international obligation to pass such a law. In fact, efforts to create common international standards on liability and compensation since the Chernobyl disaster have made exceedingly slow progress. Yet the Bill’s accompanying “Statement of Objects and Reasons” creates the deceptive impression that the proposed law aims to bring India in line internationally. If anything, the Bill seeks to set a wrong international precedent by its mollycoddling of foreign suppliers.

To be sure, technological improvements in reactor-safety systems have significantly lowered the risks of a major nuclear accident. Yet nuclear technology remains intrinsically dangerous, and a single catastrophe anywhere in the world will impose colossal, long-term costs nationally and have a chilling effect on the global appeal of nuclear power. Given the nuclear safety and security issues that have been highlighted by recent incidents in India, accident liability is a matter demanding serious consideration.

The Bill attempts to set a new principle in international law: Profits are private, accident-related liabilities are all public. The government must answer the central question: In seeking to invite U.S. reactor builders, should a poor country rush to pass a special law that skews the business terms in their favour, gratuitously burdens the Indian taxpayer and ignores the lessons of the Bhopal gas disaster?

Keywords: Civil Liability for Nuclear Damage Bill, Brahma Chellaney, Bhopal gas disaster, U.S., India, General Electric, Westinghouse, NPCIL, CSC, IAEA

India’s nuclear-accident liability law: An anti-market bill that weakens safety

Posted on March 10, 2010 by Chellaney

Kill the nuclear liability Bill

Low accident liability and legal immunity mean reactor builders will have perverse incentives for malpractices

Brahma Chellaney Mint March 11, 2010

The Civil Liability for Nuclear Damage Bill is an unparalleled piece of legislation: It aims to make foreign builders of nuclear reactors in India immune from legal action, however culpable they may be for a catastrophic accident. And it caps their liability at a ridiculously low Rs500 crore ($109 million) despite the billions of dollars in profit they are set to make. Yet, the government set the parliamentary process for the Bill’s consideration in motion under unusual circumstances—it circulated it to members on 8 March when Parliament was in turmoil over the women’s reservation issue.

Two issues stand out about the liability Bill. For one, it is an anti-market measure: It constitutes a generous Indian state subsidy to foreign firms. By seeking to shield foreign reactor builders from the weight of the financial consequences of severe accidents, the Bill shifts the main burden for accident liability from the foreign supplier to the Indian taxpayer.

Illustration: Jayachandran / Mint

For another, it weakens nuclear safety. After all, to grant foreign reactor builders legal immunity upfront and to turn their legal liability for an accident into mere compensation pegged at a pittance is hardly a way to advance nuclear safety.

Broadly, the anti-market features of the government’s proposed import of nuclear power reactors are manifold. First, the Bill seeks to help foreign firms cut their costs of doing business in India by requiring them to take accident liability insurance for a mere $109 million. The actual liability, according to the Bill, will be of the state operator, which will run foreign-built plants. The state operator, in turn, with make the foreign builder liable up to $109 million through the construction contract. Second, the government is merrily procuring land for foreign reactor builders. It has designated nuclear parks for foreign-origin reactors, reserving separate sites exclusively for US, French and Russian firms.

Three, reactor deals will be signed government-to-government without open bidding and transparency, just the way India has entered into contracts for US arms worth billions of dollars in recent years. Four, foreign firms are being freed from the task of producing electricity at marketable rates. The government will run the reactors through the state operator, subsidizing the high-priced electricity generated. And five, foreign suppliers will bask under legal immunity.

The liability Bill essentially is intended to help out the two US reactor exporting firms, Westinghouse and General Electric (GE) which, unlike their state-owned French and Russian competitors, are in the private sector. With India committed to importing at least 10,000MW of nuclear power generating capacity from the US, Washington has been zealously prodding New Delhi to enact the liability law. But in bending backwards to create a friendly business environment for US firms, the government is making the Indian taxpayer assume the principal financial burden in the event of a major accident.

Actually, the Bill symbolizes the latest in a string of conditions thrust on India under the much-trumpeted nuclear deal, which was approved by the US Congress in 2008 but whose nuclear energy benefits are unlikely to start flowing until nearly a decade from now, as the average global lead time for reactor construction has stretched to eight years. Under the deal, India got no legally binding fuel supply guarantee to avert a Tarapur-style cut-off, and no right to withdraw from its obligations under any circumstance, though the US has reserved the right for itself to suspend or terminate the arrangements if it holds India not to be in compliance with stipulated terms.

India is still negotiating with the US to secure the right to reprocess foreign-origin spent fuel under international inspection. The state department has notified the US Congress in writing, though, that “the proposed arrangements and procedures with India will provide for withdrawal of reprocessing consent” by the US.

Prime Minister Manmohan Singh had repeatedly promised to bring the nuclear deal to Parliament and “abide” by its decision. For example, he stated on 30 June 2008: “I have said it before, I will repeat it again, that you allow us to complete the process. Once the process is over, I will bring it before Parliament and abide by the House”.

Yet, no sooner had the process ended, than the government signed the 123 Agreement with the US, sidelining Parliament. Having given no role to Parliament on the main deal, the government now wants the two Houses to pass a special law to provide foreign companies with accident liability protection. In fact, as has been publicly revealed, the Bill was approved by the cabinet after the Prime Minister’s Office rode roughshod over objections raised by the finance and environment ministries to its provisions.

The Bill’s stated objectives and reasons seek to create the meretricious impression that it is designed to bring India in compliance with international nuclear liability instruments. The plain truth is that India is under no obligation to enact liability legislation. If India wants, it can follow the example of Russia, which has refused to pass legislation to waive or cap accident liability for its foreign suppliers. Or it can follow the lead of Germany, which has limitless liability and demands €2.5 billion ($3.4 billion) security from each plant’s operator.

Indeed, efforts to harmonize international rules on liability and compensation have been frustrated by the failure to bring all relevant international instruments into force. As the powerful World Nuclear Association—the lobbying arm of 180 nuclear firms, including GE, Westinghouse and Areva—admits, “States with a majority of the world’s 440 nuclear power reactors are not yet party to any international nuclear liability convention, relying on their own arrangements.”

Take the case of the US: It has its own domestic liability law, the controversial Price-Anderson Act, but it is not party to the main international instruments—the Vienna Convention of the International Atomic Energy Agency (IAEA) or the Paris Convention of the Organisation for Economic Cooperation and Development (OECD).

In 1988, to bridge the geographical scope of the Vienna and Paris conventions, a joint protocol was adopted. Then in 1997, another protocol amended the Vienna Convention to set the limit of the operator’s liability at not less than 300 million special drawing rights, or SDRs ($458 million).

The US has now become party to IAEA’s 1997 Convention on Supplementary Compensation for Nuclear Damage, or CSC, which recognizes the potential trans-boundary consequences of Chernobyl-type nuclear disasters, and thus seeks a common approach on compensation. Compensation is distinct from liability. CSC, as the name suggests, is about compensation, to be paid “supplementary” to the liability limit. To join CSC, a state must be party to the Vienna or Paris conventions, or certify that its national law complies with the CSC annex on liability. The supplementary compensation under CSC is to be provided through contributions by state-parties on the basis of their installed nuclear capacity and a United Nations rate of assessment.

The Indian government has misleadingly juxtaposed its liability Bill with CSC, which has not even entered into force.

In theory, the Bill seeks to emulate the Price-Anderson Act, the US system of indemnification for legal liability. But in reality, it picks the worst elements from both worlds—the US system and IAEA’s Vienna Convention.

The Vienna Convention has no upper ceiling on liability, only a minimum one (300 million SDRs, also reflected in CSC). But the minimum is so low that few countries have pegged liability to that level. For example, Japan’s operator liability now is 120 billion yen ($1.33 billion), while liability in Finland is unlimited, with each plant licensee required to take at least €700 million ($950 million) in insurance coverage.

The Price-Anderson system, for its part, provides for more than $10.5 billion in liability payouts for each disaster through a complex formula that includes insurance coverage carried by the reactor that suffered the accident, retrospective premiums from each of the operating reactors in the US, and a possible 5% surcharge. The US government assumes liability for any accident only above the $10.5 billion figure, which is inflation-adjusted every five years and thus variable.

The Indian Bill, by contrast, pegs maximum liability, as its clauses 6 and 7 state, at “the rupee equivalent of 300 million SDRs”, or Rs2,087 crore ($458 million)—that is, 23 times lower than the private-sector fund available under the Price-Anderson system. Of this, the total possible liability of the foreign supplier has been limited to a trifling Rs500 crore. The Union government will be liable for damages in excess of Rs500 crore but up to Rs2,087 crore.

The Price-Anderson Act—effectively a subsidy measure—has been severely criticized by independent groups in the US, where it has been mockingly called “Half-Price Anderson”. The legislation the Indian government is seeking to push through can be labelled “Free-Ride Anderson”. Under it, the reactor builder is free to rake in unlimited profits without a real liability on product safety.

What is worse is that while the Price-Anderson Act permits economic (but not legal) channelling of liability, thereby allowing lawsuits against any party, the Indian Bill grants foreign suppliers immunity from legal action by introducing legal channelling of all liability to the Indian government. It not only turns the “polluter pays” principle on its head, but also forecloses the possibility of victims suing the foreign reactor builder for additional damages even in Indian courts.

With the improvement in reactor safety systems, chances of a nuclear accident are admittedly low. But the consequences of a single nuclear accident would be colossal, with a serious radioactive release likely to cause lasting public health problems, including genetic damage passing on to future generations. Though it did not kill anyone, the 1979 partial core meltdown at the Three Mile Island nuclear plant in the US led to 14 years of clean-up costing at least $1 billion. Little surprise that Washington has been pressing New Delhi hard on the liability issue.

More fundamentally, creating an artificial market with open-handed subsidies, land acquisition for foreign firms, abysmally underrated accident liability, and electricity supply at state-supported rates is no way to meet energy needs, or to reduce carbon emissions, or to help India’s poor. The Bill should be seen for what it is—an anti-market measure designed to promote unfair business practices and cartelization by rigging commercial terms in favour of select foreign suppliers.

Indeed, the Bill sends out a jarring message: Indian lives are cheap. It is a message at odds with India’s pride in being the world’s largest democracy.

Brahma Chellaney is professor of strategic studies at the Centre for Policy Research in New Delhi. Comment at theirview@livemint.com

India’s “graduated” approach to talks with Pakistan

Posted on February 26, 2010 by Chellaney

Can’t Take Eyes Off Reality

Brahma Chellaney

The Economic Times, February 26, 1010

NORMALLY, diplomatic talks between any two neighbouring countries should be routine. But with the Pakistani military establishment continuing to sponsor crossborder terrorism in India behind a nuclear shield — a situation unparalleled in the world — Indo-Pakistan talks are anything but normal.

The renewed talks between the Indian and Pakistani foreign secretaries have attracted attention for eight reasons. The first reason is the U-turn in Indian policy. Prime Minister Manmohan Singh had said “some Pakistani official agencies must have supported” the November 2008 Mumbai terror attacks. His surprise decision to renew talks was greeted in Pakistan as a major diplomatic climbdown by India.

A second reason is that the shift in the Indian position occurred without the government so much as offering a reasoned explanation to the public for the switch. Indeed, the shift occurred at a time when, as the PM has admitted, the level of crossborder infiltration by terrorists is increasing.

A third reason is a disturbing one: No sooner had India announced its decision to resume talks with Pakistan than a major terrorist strike in Pune happened. And a day after the foreign secretaries met in New Delhi, terrorists killed nine Indians, including two army doctors, in an attack on two Kabul guesthouses. That attack is believed to be the handiwork of Pakistan’s Inter-Services Intelligence (ISI) agency, which earlier was behind the July 2008 bombing of the Indian Embassy in Kabul.

What the Pune and Kabul attacks highlight was that when Pakistan is kept under pressure, with the threat of Indian retaliation hanging like a sword over its head, it is able to rein in terrorist elements and prevent any terror attack occurring in India. But the moment the pressure is lifted against it and an air of triumphalism begins to reign in Islamabad, terrorist attacks against Indian targets are orchestrated, breaking a 14-month lull. Yet Prime Minister Manmohan Singh says, “There is no alternative to dialogue to resolve the issues that divide us.”

This proves that the terrorist elements, far from being autonomous, are very much under the control of the Pakistani military establishment, which is able to use them at will.

The fourth reason is that the Indian decision seemed designed to aid America’s Af-Pak strategy. The publicly acknowledged U.S. strategy to reconcile with the Pakistan-backed Afghan Taliban has only increased U.S. reliance on the Pakistani military and intelligence. That strategy indeed received international imprimatur at the London conference.

At a critical time when the U.S. is seeking greater Pakistani military and intelligence assistance to build pressure on the Afghan Taliban commanders and bring them to the negotiating table, Washington has advised New Delhi to lend a helping hand by placating Islamabad through a resumption of talks.

As the top U.S. military commander in Afghanistan, Gen. Stanley McChrystal, has admitted, the aim of the American military surge is to bring the Afghan Taliban to the negotiating table, not to beat back the insurgency. The “surge first, then negotiate” U.S. strategy seeks to strike a political deal with the enemy from a position of strength.

For the talks with the Afghan Taliban to be successful, the U.S. intends to squeeze the Taliban first. Towards that end, the U.S. military’s ongoing Marjah offensive in Afghanistan represents a show of force.

After persuading the Indians to agree to resume talks with Islamabad, the U.S. not only launched the Marjah offensive, but also got Pakistan’s Inter-Services Intelligence (ISI) to assist in the “capture” of several Afghan Taliban leaders. They include Mullah Abdul Ghani Baradar, the Afghan Taliban’s alleged operations chief; Mullah Abdul Kabir, a deputy prime minister in the former Taliban regime; Mullah Abdul Salam, an alleged Taliban shadow governor for Afghanistan’s Kunduz province; and Mullah Mohammad of Baghlan province.

The stage-managed arrests of these mullahs from Pakistani cities, including Karachi and Nowshera, showed that Afghan Taliban leaders are operating from urban centres in the heartland of Pakistan, not from mountain caves along the Af-Pak frontier.

A fifth reason is that India has not only dovetailed its Pakistan policy to America’s Af-Pak strategy, but also outsourced it to Washington. Instead of applying direct leverage against Pakistan, India is depending on the U.S. to lean on Islamabad.

India has been loath to use economic and security levers against Pakistan. Its decision to resume talks with Pakistan shows it also is reluctant to employ the diplomatic card.

Yet Indian reliance on the U.S. carries high risk. After all, American policy in southern Asia is being driven by narrow, politically expedient considerations, as illustrated by the manner the Obama administration is propping up Pakistan through generous aid and lethal-arms transfers. As U.S. ex-senator, Larry Pressler, has warned, “When the U.S. leaves Afghanistan, India will have a Pakistan ‘on steroids’ next door and a Taliban state to deal with in Afghanistan.”

The sixth reason is that the Indian government has sought to pull the wool over the eyes of the Indian public by claiming that the resumed dialogue process is centred on terrorism when in reality it is about the usual issues, including Kashmir. Nothing better illustrates this than the fact that New Delhi bent backwards to arrange a meeting between the visiting Pakistani foreign secretary and Hurriyet leaders, including Syed Ali Shah Geelani. In fact, the Pakistani foreign secretary came to New Delhi for two sets of dialogue: One with the Indian government, and the other with Geelani and his fellow Hurriyet leaders. What did the Pakistani foreign secretary convey to Geelani and company? The answer: Pakistan has not given up its plans to further shrink India’s frontiers.

The seventh reason is that New Delhi is engaging not the actors that wield real power in Pakistan — the military establishment — but a civilian government that neither is responsible for the terror attacks against India nor in a position to stop them. Yet, New Delhi has begun a “graduated” process of talks with the Pakistani government, effectively giving the Pakistani military a carte blanche to continue to wage its war by terror. With External Affairs Minister S.M. Krishna telling Parliament that the foreign secretary-level talks were an “encouraging step” towards restoring full discourse, New Delhi is headed toward resuming the composite-dialogue process before long.

The eighth and final reason is that such talks only reinforce the India-Pakistan pairing when the need is for India to de-hyphenate itself from the quasi-failed, terror-exporting Pakistan, which is a crucible of extremism and fundamentalism. More than Washington it is New Delhi’s unimaginative diplomacy that is responsible for the continued India-Pakistan hyphenation internationally.

The author is professor of strategic studies at the Centre for Policy Research.

Learning from a failed summit

Posted on February 23, 2010 by Chellaney

Three lessons from Copenhagen

By BRAHMA CHELLANEY

The Japan Times

The world now accepts that protecting our atmosphere, hydrosphere, lithosphere, biosphere and even cyberspace — the "global commons" — is the responsibility of all countries. Enforcing that norm is proving the difficult part.

And nowhere is the difficulty greater than in two areas: shielding our atmosphere from the buildup of global-warming greenhouse gases; and preventing cybercrime.

Of these two challenges, combating climate change is proving most difficult to crack. The reason for that is not hard to seek: effectively combating climate change demands fundamental shifts in national policies and approaches, as well as lifestyle changes in the developed world. It is easier to visualize than to actually devise carbon standards that can protect the material and social benefits of continued economic growth in the developing world and also help shield prosperity in the developed countries.

International climate-change negotiations are to be renewed this year. To be successful, they must heed the lessons of Copenhagen.

The first lesson is that climate change is not just a matter of science but also a matter of geopolitics. Without improved geopolitics, there can be no real fight against climate change. The expectation at Copenhagen that scientific-research results would trump geopolitics was belied.

The need to focus on improving the geopolitics is also being highlighted by the damage, however limited, to the independence of scientific research. The credibility of the Intergovernmental Panel on Climate Change (IPCC) has taken a beating since the Copenhagen summit, to the delight of climate-change skeptics. Just before Copenhagen we had "climate-gate," as the publication of damaging e-mail and other documents from the Climate Research Unit at Britain’s University of East Anglia became known, exposing highly politicized scientific research in the form of manipulated or suppressed data on human-driven climate change. After Copenhagen has came the IPCC’s own "glacier-gate" scandal over one of its key claims in a 2007 report.

The IPCC had to admit that its published claim that the Himalayan glaciers are set to disappear by 2035 rested not on peer-reviewed scientific research but on two 1999 magazine interviews with one glaciologist. The glaciologist’s assertion had been recycled in a 2005 report by the environmental campaign group, World Wide Fund For Nature, and then enthusiastically picked up by the IPCC without any investigation. To IPCC’s acute mortification, the glaciologist went public after Copenhagen to say he had been misquoted in the magazine interviews.

To make matters worse, the coordinating lead author of the portion of the IPCC report, where the claim appeared, publicly acknowledged that the bogus claim had been intentionally incorporated to help put political pressure on Asian leaders.

The second lesson from Copenhagen is that to get an international deal, there first must be a deal between the U.S. and China. These two countries are very dissimilar, yet they have a similar carbon profile: Each contributes between 22 to 24 percent of all human-induced greenhouse gases in the world.

If a deal can be reached between the world’s two greatest polluting nations, which together are responsible for more than 46 percent of all greenhouse-gas emissions, an international accord on climate change would be easier to reach. The United States and China, however, view the world in starkly different terms. The key point that has emerged from their latest diplomatic spats is China’s reluctance to subordinate domestic goals for larger international good, be it a climate-change regime or international efforts to put pressure scofflaw states. It also is unwilling to give up unfair practices, such as the gross undervaluation of the renminbi.

The Cold War undertones in U.S. Secretary of State Hillary Clinton’s recent statement — likening the "information curtain" to the Iron Curtain — reflected an implicit admission that the central assumption guiding U.S. policy on China since the 1990s has gone awry: that assisting China’s economic rise would usher in political opening there. The strategy to use market forces and the Internet to open up a closed political system simply isn’t working. Indeed, the more economic power China has accumulated, the more adept it has become in extending censorship controls.

China strategically seems to bide its time until it can openly challenge the present U.S.-led global institutional structure, which has remained static since the mid-20th century. China accepts and supports parts of the existing order that serves its needs, such as the U.N. Security Council or the World Trade Organization. But it plays by its own rules when its interests do not mesh with the other parts.

In Copenhagen, China did everything to ensure no binding agreement emerged. To impede decision-making, it sent only a vice foreign minister to meetings set for the level of heads of government. It also used poor states as a front to obstruct progress through procedural wrangling.

Against that background, prospects of China and the U.S. cutting a deal on climate deal this year don’t look good. If anything, their disputes on trade, currency and security policies threaten to engender greater bilateral tensions and conflict.

A third lesson from Copenhagen, being reinforced by the present circumstances, is to have a more-realistic agenda. Too much focus has been put on carbon cuts for nearly two decades, almost to the exclusion of other elements. It is now time to disaggregate the climate-change agenda into smaller, more manageable parts. After all, a lot can be done without a binding agreement on carbon cuts through national targets.

Take energy efficiency, which can help bring a quarter of all gains in reduction of greenhouse-gas emissions. Energy inefficiency is a problem not only in the Third World, but also in the developed world. The U.S., for instance, belches out twice as much carbon dioxide per head as Japan, although the two countries have fairly similar per capita incomes.

Furthermore, given that deforestation accounts for as much as 20 percent of the emission problem, carbon storage is as important as carbon cuts. Each hectare of rain forest, for example, stores 500 tons of carbon dioxide. Forest conservation and management thus are important to tackle climate change. In fact, to help lessen the impact of climate change, states need to strategically invest in ecological restoration — growing and preserving rain forests, building wetlands and shielding species critical to our ecosystems

The international community must also focus on stemming man-made environmental change. Environmental change is distinct from climate change, although there is a tendency on the part of some enthusiasts to blur the distinction and turn global warming into a blame-all phenomenon.

Man-made environmental change is caused by reckless land use, overgrazing, depletion and contamination of surface freshwater resources, overuse of groundwater, degradation of coastal ecosystems, inefficient or environmentally unsustainable irrigation systems, waste mismanagement, and the destruction of natural habitats, including mangroves and forests. Such environmental change has no link to global warming. Yet, ultimately, it will contribute to climate variation and thus must be stopped.

In fact, man-made environmental change is the main threat to the integrity of freshwater reserves in the world. Water shortages already are reaching critical proportions in several parts of the world. And this has a bearing on food security. This suggests that goals of food security increasingly will be difficult to achieve. The World Bank has projected the demand for food to rise 50 percent by 2030, even as the present global food system struggles to meet existing demand. Today, agriculture makes up more than two-thirds of all water withdrawals globally, while contributing 14 percent of the greenhouse gas emissions — about as much as running every car, ship and plane. To grow more food demands more water. But water availability already is coming under pressure in the most densely-populated parts of the world.

In that light, we need to focus as much on the water challenge as on the energy challenge. As the Global Trends 2025 report of the U.S. National Intelligence Council has warned that although strategic rivalries in the 21st century probably would center on issues related to trade, investment, technology innovation and acquisition, "increasing worries about resources — such as energy or even water — could easily put the focus back on territorial disputes or unresolved border issues. Asia is one region where the number of such border issues is particularly noteworthy."

Climate change and environmental change, given their implications for resource security and social and economic stability, are clearly threat multipliers. While continuing to search for a binding international agreement, the international community should also explore innovative approaches, such as global public-private partnership initiatives. As the international experience since the 1992 U.N. Framework Convention on Climate Change bears out, it is easier to set goals than to implement them. How many state parties to the Kyoto Protocol have faithfully implemented their obligations on carbon cuts under that treaty?

The political commitments reached in principle at Copenhagen already have run into controversy as well as into varying interpretations, marring their value. They also have created bad blood between the BASIC bloc of four leading developing countries and the broader grouping of developing nations known as the Group of 77 (G77). The smaller countries in the G77 accuse the BASIC bloc of China, India, Brazil and South Africa of acting unilaterally and opaquely in stitching together that nonbinding agreement with the U.S. in Copenhagen.

The "Copenhagen Accord," an ad hoc, face-saving agreement at the eleventh hour to cover up the summit failure, seeks to commit major developing countries to "implement mitigation actions," open to "international consultations and analysis."

Its future, however, is uncertain. Only 55 of the 194 countries submitted their national action plans on climate change by the January 31 deadline, forcing the U.N. to push back the deadline indefinitely.

The BASIC bloc indeed is a partnership founded on political opportunism and is unlikely to hold for long. The carbon profiles of Brazil, India, South Africa and China are hardly similar. China’s per capita carbon emissions are more than four times higher than India’s. It rejects India’s approach that per capita emission levels and historic contributions to the buildup of greenhouse gases should form the objective criteria for carbon mitigation. China, as the world’s back factory, wants a different formula that marks down carbon intensity linked to export industries. Once criteria for mitigation action are sought to be defined in future negotiations, this alliance will unravel quickly.

More broadly, the climate-change agenda has become so politically driven that all sorts of competing economic and other interests have been tagged on by important actors. Climate change should not be allowed to become a convenient peg on which to hang assorted national interests.

Brahma Chellaney is professor of strategic studies at the Center for Policy Research in New Delhi.

The Japan Times: Wednesday, Feb. 24, 2010

Planned U.S. Faustian bargain with the Taliban

Posted on February 16, 2010 by Chellaney

Surge, bribe and run

Washington has learned nothing from past policies

By Brahma Chellaney The Washington Times February 16, 2010

What President Obama’s administration has been pursuing in Afghanistan for the past year has received international imprimatur, thanks to last month’s well-scripted London Conference. Four words sum up that strategy: Surge, bribe and run. Mr. Obama has designed his twin troop surges not to rout the Afghan Taliban militarily but to strike a political deal with the enemy from a position of strength. As his top commander in Afghanistan, Gen. Stanley A. McChrystal, has admitted, the aim of such troop increases is to bring the Taliban to the negotiating table, not to beat back the insurgency. Without a deal with Taliban commanders, the U.S. cannot execute the "run" part.

The Obama approach has been straightforward: If you can’t defeat them, buy them off. Having failed to rout the Taliban, Washington has been holding indirect talks with the Afghan militia’s shura, or top council, whose members, including the one-eyed chief, Mullah Mohammad Omar, are holed up in Quetta, the capital of Pakistan’s sprawling Baluchistan province. The talks have been conducted through the Pakistani, Saudi and Afghan intelligence agencies. Gen. McChrystal has cited Saudi Arabia and the United Arab Emirates as possible venues for formal talks.

Mr. Obama, paradoxically, is seeking to apply to Afghanistan the Iraq model of his predecessor, George W. Bush, who used a military surge largely as a show of force to buy off Sunni tribal leaders and other local chieftains. But Afghanistan isn’t Iraq, and it is a moot question whether the same strategy can work, especially when Mr. Obama has not hidden his intent to end the U.S. war before he comes up for re-election in 2012. In fact, he has reiterated July 2011 as the time for a gradual U.S. military withdrawal to begin.

In a land with a long tradition of humbling foreign armies, payoffs are unlikely to buy peace. All the Pakistan-backed Taliban has to do is simply wait out the Americans. After all, popular support for the Afghan war has markedly ebbed in the U.S. even as the other countries with troops in Afghanistan exhibit war fatigue.

If a resurgent Taliban is on the offensive, with 2008 and 2009 proving to have been the deadliest years for U.S. forces since the 2001 American intervention, it is primarily because of two reasons: the sustenance the Taliban still draws from Pakistan, and a growing Pashtun backlash against foreign intervention. The Taliban leadership – with an elaborate command-and-control structure oiled by petrodollars from Arab sheikdoms and proceeds from the opium trade – operates from the comfort of sanctuaries in Pakistan.

Fathered by Pakistan’s Inter-Services Intelligence (ISI) agency and midwifed by the CIA in 1994, the Taliban rapidly emerged as a Frankenstein’s monster. Yet President Clinton’s administration acquiesced in the Taliban’s ascension to power in Kabul in 1996 and turned a blind eye as that thuggish militia, in league with the ISI, fostered narcoterrorism and swelled the ranks of the Afghan war alumni waging transnational terrorism. With Sept. 11, 2001, however, the chickens came home to roost. In declaring war on the Taliban in October 2001, U.S. policy came full circle.

Now, desperate to save a faltering military campaign, U.S. policy is coming another full circle as Washington advertises its readiness to strike deals with "moderate" Taliban (as if there can be moderates in an Islamist militia that enforces medieval practices).

In the past year, U.S. military and intelligence have carried out a series of air and drone strikes and ground commando attacks from Afghanistan in Pakistan’s tribal Waziristan region against the Pakistani Taliban, the nemesis of the Pakistani military. The CIA alone has admitted carrying out a dozen drone strikes in Waziristan to avenge the bombing of its base in Khost, Afghanistan. The Khost bombing was carried out by a Jordanian double agent, who said in a prerecorded video that he was going to take revenge for the U.S. attack that killed the Pakistani Taliban chief Baitullah Mehsud.

But, tellingly, the U.S. military and intelligence have not carried out a single air, drone or ground attack against the Afghan Taliban leadership in Baluchistan, south of Waziristan. The CIA and the ISI are again working together, including in shielding the Afghan Taliban shura members so as to facilitate a possible deal.

Mr. Obama’s Afghan strategy should be viewed as a shortsighted strategy that unwittingly has repeated the very mistakes of American policy on Afghanistan and Pakistan over the past three decades that have come to haunt U.S. security and the rest of the free world. Washington is showing it has learned no lesson from its past policies that gave rise to monsters like Osama bin Laden and Mullah Omar and to "the state within the Pakistani state," the ISI, which was made powerful during Ronald Reagan’s presidency as a conduit of covert U.S. aid for anti-Soviet Afghan guerrillas.

To justify the planned Faustian bargain with the Taliban, the Obama team is drawing a specious distinction between al Qaeda and the Taliban and illusorily seeking to differentiate between "moderate" Taliban (the good terrorists) and those who rebuff deal-making (the badterrorists).

The scourge of transnational terrorism cannot be stemmed if such specious distinctions are drawn. India, which is on the front line of the global fight against international terrorism, is likely to bear the brunt of the blowback of Mr. Obama’s AfPak strategy, just as it came under terrorist siege as a consequence of the Reagan-era U.S. policies in that belt.

The Taliban, al Qaeda and groups like the Lashkar-e-Taiba are a difficult-to-separate mix of soul mates who together constitute the global jihad syndicate. The only difference is that al Qaeda operates out of mountain caves in Pakistan while the Taliban and Lashkar-e-Taiba operate openly across Pakistan’s western and eastern borders. To cut a deal with any constituent of this syndicate will only bring more international terrorism.

A stable Afghanistan cannot emerge without dismantling the Pakistani military’s sanctuaries and sustenance infrastructure for the Afghan Taliban and militarily decapitating the latter’s command center in Baluchistan. As U.S. Ambassador Karl Eikenberry put it in his leaked November cables to Secretary of State Hillary Rodham Clinton, "[M]ore troops won’t end the insurgency as long as Pakistan sanctuaries remain." Instead of seeking to cut off the Taliban’s support, the U.S. is actually partnering with the Pakistani military to win over the Taliban. And, as an inducement, it has upped the annual aid for Pakistan for next fiscal year to $3.2 billion – a historic high.

Even if the Obama administration managed to bring down violence in Afghanistan by making a deal with the Taliban, that would only strengthen the militia’s cause, besides keeping the Taliban intact as a fighting force with active ties to the Pakistani military. Such a tactical gain would exact serious costs on regional and international security by keeping the AfPak region as the epicenter of a growing transnational terrorism scourge and upsetting civilian reconstruction in Afghanistan, where India has emerged as one of the largest bilateral aid donors.

Regrettably, the Obama administration is falling prey to a long-standing U.S. policy weakness: the pursuit of narrow objectives without much regard for the interests of friends. It seems determined to save face even if the United States ultimately loses the Afghan war.

Brahma Chellaney is a professor of strategic studies at the privately funded Center for Policy Research in New Delhi.

http://washingtontimes.com/news/2010/feb/15/surge-bribe-and-run/

Nuclear-accident liability

Posted on February 16, 2010 by Chellaney

Ignoring lessons of Bhopal and Chernobyl

BRAHMA CHELLANEY

The government’s nuclear-accident liability bill seeks to burden Indian taxpayers with a huge hidden subsidy by protecting foreign reactor builders from the weight of the financial consequences of severe accidents.

The Hindu newspaper, February 16, 2010

The vaunted civil nuclear deal with the United States came into effect in 2008, with the U.S. Congress attaching a string of conditions to the ratification legislation, the Nuclear Cooperation Approval and Non-Proliferation Enhancement Act (NCANEA). The Indian Parliament was allowed no role to play, not even to examine the deal’s provisions. But having sidelined Parliament on the main deal, the government now wants it to pass a special law to provide foreign companies with liability protection in case of nuclear accidents. Such a law has been demanded by U.S. firms, which, unlike their state-owned French and Russian competitors, are in the private sector.

It is important to remember that the promises on which the deal was sold to the country have been belied, one by one. For example, Prime Minister Manmohan Singh had exulted in 2008 that the deal “marks the end … of the technology-denial regime against India.” Yet, just last month, his Defence Minister conveyed to U.S. Defence Secretary Robert Gates India’s “concerns regarding denial of export licences for various defence-related requirements of the armed forces” and other “anomalous” technology restrictions.

After the 123 Agreement was clinched, Dr. Singh told Parliament in 2007 that an “important yardstick has been met by the permanent consent for India to reprocess.” But in 2010, India is still negotiating with the U.S. to secure a right to reprocess spent fuel. The U.S., in any event, has no intention of granting India “permanent consent,” with the State Department having notified Congress that the proposed arrangements with India “will provide for withdrawal of reprocessing consent.”

The biggest fiction, of course, was to present the deal as the answer to the country’s burgeoning energy needs. Nuclear energy cannot be a reasonable solution for any country because plants take too long to build and cost far too much. The first plant to be set up under the deal is likely to generate electricity, in the rosiest scenario, not before 2016.

In a more-plausible scenario, the timeline may stretch up to 2020, given the three reactor-exporting countries’ record. While the U.S. has built no plant in many years, Russia is still struggling to complete its much-delayed twin reactors in Kudankulam, India. As for France, its two new plants under construction, one in Finland and the other at home, are billions of dollars over budget and years behind schedule.

The bigger question, which New Delhi consistently has shied away from discussing, is about the cost of electricity from foreign-built reactors. India’s heavily-subsidised indigenous nuclear power industry is supplying electricity at between 270 and 290 paise per kilowatt hour from the reactors built since the 1990s. That price is far higher than the cost of electricity from coal-fired plants. But electricity from foreign-built nuclear reactors will be even dearer. That, in effect, will increase the burden of subsidies on the Indian taxpayers, even as the reactor imports lock India into an external-fuel dependency.

To compound matters, the government’s Civil Liability for Nuclear Damages Bill, proposed to be introduced in the upcoming Parliament session, amounts to yet another tier of state subsidy, even if a hidden one. The bill is designed to shield foreign-reactor builders from the weight of the financial consequences of severe accidents. It shifts the primary burden for accident liability from the foreign builders to the Indian state. Although its text has not yet been made public, the bill is said to cap total compensation payable in the event of a severe radioactive release at Rs. 2,250 crore ($483 million), with the liability of the foreign supplier restricted to a trifling Rs. 300 crore ($64.6 million).

That represents an Indian taxpayer subsidy to foreign firms to help slash their cost of doing business in India. Each foreign reactor will carry a price tag of several billion dollars. Given that India has agreed to award contracts specifically to U.S., French and Russian firms, each such foreign supplier is expected to build more than one twin-reactor plant. India indeed has agreed in writing to import at least 10,000 megawatts of nuclear power-generating capacity from the U.S. alone. While each such firm stands to rake in billions of dollars in profit from the Indian market, its accident liability is being capped virtually at a pittance.

The partial core meltdown almost 31 years ago at the Three Mile Island nuclear plant in Pennsylvania didn’t kill anyone, but it led to 14 years of clean-up costing $1 billion. Despite India’s own bitter experience over the Union Carbide gas catastrophe at Bhopal, the government wants the Indian taxpayers to carry the can for foreign reactor builders. Why cap liability on terms financially prejudicial to Indian interests?

Worse still, India — instead of facilitating open market competition — is seeking to protect foreign firms from the market. From procuring land for them for reactor construction to freeing them from the task of producing electricity at marketable rates, India is doing everything to rig the terms of doing business in their favour. By designating nuclear parks for foreign-built reactors, the government has reserved reactor sites exclusively but separately for the U.S., France and Russia. In the same way it has signed billions of dollars worth of arms contracts in recent years with the U.S. without any competitive bidding and transparency, New Delhi is set to award nuclear contracts on a government-to-government basis.

India’s nuclear-accident liability bill aims to help replicate what U.S. nuclear firms presently enjoy in their domestic market, where the Price-Anderson Act caps the industry’s liability for a severe radioactive release. But for each accident, the Price-Anderson liability system provides more than $10.5 billion in total potential compensation through a complex formula that includes insurance coverage carried by the reactor that suffered the accident, “retrospective premiums” from each of the covered reactors in operation in the U.S., and a 5 per cent surcharge. Washington assumes liability for any catastrophic damages from an accident only above the $10.5 billion figure (which is inflation-adjusted every five years and thus variable).

Why should a poor country like India assume liability from a ridiculously low threshold? In fact, to cover claims of personal injury and property damage in the event of a catastrophic nuclear accident, India — given the density of its population and the consequent higher risks — must also maintain a large standby compensation pool, but without the state being burdened.

Another troubling aspect of the proposed Indian legislation is that while the Price-Anderson Act permits economic (but not legal) channelling of liability, thereby allowing lawsuits against any party, New Delhi is granting foreign suppliers immunity from legal actions — however culpable they may be for an accident — by introducing legal channelling of all liability to the Indian state (which will run the foreign-built plants through its Nuclear Power Corporation of India Limited). What will it do to nuclear safety to free foreign suppliers upfront from “the precautionary principle” and “the polluter pays principle” and turn their legal liability for an accident into mere compensation, that too at an inconsequential level?

To be sure, without a cap on liability damages in India, U.S. firms would be exposed to unlimited liability. But in its effort to help create a congenial environment for them to do business in India, should the state gratuitously assume the principal financial burden in the event of an accident? The proposed Indian cap is well below international levels. Japan, for example, has boosted its plant operator liability to120 billion yen ($1.33 billion). Under the OECD’s 2004-amended Paris Convention, total liability was set at €1.5 billion ($2.04 billion), with the operator’s share being nearly half. Germany, for its part, has unlimited operator liability and demands € 2.5 billion ($3.4 billion) security from each plant’s operator.

After the 1986 Chernobyl disaster, with its transboundary consequences, international efforts were initiated to harmonise rules on liability and compensation. But those efforts have been stymied by the failure to bring all relevant international instruments into force. States with a majority of the world’s present 436 nuclear power reactors are not yet party to any international liability convention. Many countries still maintain a “wait and see” approach. For example, China, Japan and the U.S. are not party to any international liability convention, while Russia — a party to the Vienna Convention since 2005 — has refused to pass legislation to waive or cap accident liability for its foreign suppliers. China has yet to erect a formal domestic liability regime, although its State Council in 1986 issued an administrative legal document as an “interim” liability measure.

When a number of nuclear-generating countries are yet to adopt domestic legislation in this field, let alone ratify international conventions, why is New Delhi in a rush to pass a bill that caps liability on terms weighted in favour of foreign suppliers? Parliament indeed should seize the opportunity offered by the liability bill to scrutinise the nuclear deal in its entirety.

U.S. policy drift on Afpak

Posted on February 10, 2010 by Chellaney

The Dangers of Policy
Myopia

Brahma Chellaney

Mint, February 11,
2010

It may be the lack of a real opposition in the country that
allows the government to make abrupt shifts in foreign policy under external
persuasion without so much as offering a reasoned explanation to the Indian
public for the switch.

India first fell in line on Afghanistan at the London
conference, organized principally to gain an international stamp of approval for
U.S. President Barack Obama’s strategy to negotiate a deal with the “moderate”
Taliban (as if there can be moderates in an Islamist
militia that enforces medieval practices). The external affairs minister
returned from London saying India was
willing to give that strategy a try.

Soon thereafter, New Delhi
announced it was resuming dialogue with Pakistan at the foreign secretary
level. What prompted New Delhi
to do that? Mum is the word. What has Pakistan done or delivered on the
anti-terror front to deserve this gesture? The answer: nothing. Yet, once again,
dialogue has been delinked from terrorism, as if the Indian leadership has
learned nothing from the Sharm-el-Sheikh goof.

Government decisions anchored neither in a well-thought-out
strategy nor in principles can only undermine national interests. No sooner had
New Delhi announced its U-turn on Pakistan than Washington upped the annual U.S.
aid for Islamabad from the next fiscal year to $3.2 billion — a historic high. What
Obama is providing Pakistan
in one year is exactly the amount one of his predecessors, Ronald Reagan, gave Pakistan over
six years. Yet New Delhi
has not made a peep.

It was left to an ex-U.S. senator,
Larry Pressler, to urge India
to speak up on the dangerous drift in Washington’s
Afpak strategy, including propping up Pakistan with generous aid and lethal-arms
transfers. “When the U.S.
leaves Afghanistan, India will have a Pakistan
‘on steroids’ next door and a Taliban state to deal with in Afghanistan,” according to
Pressler.

With Obama pushing for a deal with the Pakistan-backed
Afghan Taliban, Islamabad
already is feeling vindicated. Obama is
sending an additional 30,000 U.S.
troops not to militarily rout the Taliban but to strike a deal with the enemy
from a position of strength. As his top commander in Afghanistan, Gen. Stanley McChrystal, has admitted,
the aim of the surge is to bring the Taliban to the negotiating table, not to
beat back the insurgency.

But as
U.S. Ambassador Karl
Eikenberry has put it in his leaked November cables to Secretary of State Hillary
Clinton, “More troops won’t end the insurgency as long as Pakistan
sanctuaries remain.” Yet,
Washington already is holding indirect talks
with the Afghan militia’s shura, or
top council, whose members are holed up in Quetta,
capital of Pakistan’s
sprawling Baluchistan province. The talks have
been conducted through the Pakistani, Saudi and Afghan intelligence agencies. McChrystal has cited Saudi Arabia or the United Arab Emirates as a possible
venue for formal talks.

The more sensible thing to do would be to dismantle the
Pakistani military’s sanctuaries and sustenance infrastructure for the Afghan
Taliban and militarily decapitate the latter’s command center in Baluchistan. But Obama has not hidden his intent to end
the U.S.
war before he comes up for reelection in 2012. Indeed, as if to hearten the Afghan Taliban and their
sponsors, the Pakistani military, he has reiterated July 2011 as the
timeline for a gradual U.S.
military withdrawal to begin.

To facilitate his pursuit of such narrow interests, Obama
has been pressuring India
to come on board. And to rationalize the planned Faustian bargain with the
Taliban, the White House has drawn a specious distinction between Al Qaeda and the Taliban and sought to discriminate
between “moderate” Taliban and those that rebuff deal-making. So, McChrystal classifies the
thuggish Gulbuddin Hekmatyar as a moderate because he is “most likely to cut a
deal.”

The Afghan Taliban
leadership — with an elaborate command-and-control structure oiled by
petrodollars from Arab sheikhdoms and proceeds from opium trade — operates from
the comfort of sanctuaries in Pakistan.
Fathered by Pakistan’s
Inter-Services Intelligence and midwifed by the U.S. Central Intelligence
Agency in 1994, the Taliban rapidly emerged as a Frankenstein’s monster. Yet
President Bill Clinton’s administration acquiesced in the Taliban’s ascension
to power in Kabul
in 1996 and turned a blind eye as that militia, in league with the ISI,
fostered narcoterrorism and swelled the ranks of the Afghan war alumni waging
transnational terrorism.

With 9/11,
however, the chickens came home to roost. In declaring war on the Taliban in
October 2001, U.S.
policy came full circle. Now, desperate to save a faltering military campaign, U.S. policy is coming another full circle as Washington advertises its readiness to strike a deal with
the Quetta shura.

India,
which is on the front lines of the global fight against international
terrorism, is likely to bear the brunt of the blowback of Obama’s Afpak
strategy, just as it came under terrorist siege as a consequence of the
Reagan-era U.S. policies in that belt. A Talibanized Pakistan with a Taliban
government in Afghanistan would encourage every violent
Islamic group that can inflict mass casualties on civilians in India.

The U.S., separated
by a cushion of thousands of miles, thinks it can get away by playing dangerous
games in the Afpak belt. But as a friend, India
should be openly advising the U.S.
against seeking to unwittingly repeat the very mistakes of past American
policy that have come to haunt Western and Indian security. That’s what friends are for.
To toe the U.S.
line on Afpak deferentially
is to become an accessory in the current lurch toward disaster.

Brahma Chellaney is professor of strategic
studies at the Centre for Policy Research.

Obama’s Afghan policy: Surge, bribe and run

Posted on February 7, 2010 by Chellaney

U.S. Afpak path comes full circle

By BRAHMA CHELLANEY

The Japan Times

What U.S. President Barack Obama’s administration has been pursuing in Afghanistan for the past one year has now received international imprimatur, thanks to the well-scripted London conference. Four words sum up that strategy: Surge, bribe and run.

Obama has designed his twin troop surges not to militarily rout the Afghan Taliban but to strike a political deal with the enemy from a position of strength. Without a deal with Taliban commanders, the United States cannot execute the "run" part.

The Obama approach has been straightforward: If you can’t defeat them, buy them off. Having failed to rout the Taliban, Washington has been holding indirect talks with the Afghan militia’s shura, or top council, whose members are holed up in Quetta, capital of Pakistan’s sprawling Baluchistan province, including the one-eyed chief, Mullah Mohammad Omar. The talks have been conducted through the Pakistani, Saudi and Afghan intelligence agencies.

Obama, paradoxically, is seeking to apply to Afghanistan the Iraq model of his predecessor, George W. Bush, who used a military surge largely as a show of force to buy off Sunni tribal leaders and other local chieftains. But Afghanistan isn’t Iraq, and it is a moot question whether the same strategy can work, especially when Obama has not hidden his intent to end the U.S. war before he comes up for re-election in 2012.

In a land with a long tradition of humbling foreign armies, payoffs are unlikely to buy peace. All that the Pakistan-backed Taliban has to do is to simply wait out the Americans. After all, popular support for the Afghan war has markedly ebbed in the U.S., even as the other countries with troops in Afghanistan exhibit war fatigue.

If a resurgent Taliban is now on the offensive, with 2008 and 2009 proving to be the deadliest years for U.S. forces since the 2001 American intervention, it is primarily because of two reasons: the sustenance the Taliban still draws from Pakistan; and a growing Pashtun backlash against foreign intervention.

The Taliban leadership — with an elaborate command-and-control structure oiled by Wahhabi petrodollars and proceeds from opium trade — operates from the comfort of sanctuaries in Pakistan. Fathered by Pakistan’s Inter-Services Intelligence (ISI) agency and midwifed by the U.S. Central Intelligence Agency in 1994, the Taliban emerged as a Frankenstein’s monster.

Yet President Bill Clinton’s administration acquiesced in the Taliban’s ascension to power in Kabul in 1996 and turned a blind eye as the thuggish militia, in league with the ISI, fostered narco-terrorism and swelled the ranks of the Afghan war alumni waging transnational terrorism. With 9/11, however, the chickens came home to roost. The U.S. came full circle when it declared war on the Taliban in October 2001. Now, desperate to save a faltering military campaign, U.S. policy is coming another full circle as Washington advertises its readiness to strike deals with "moderate" Taliban (as if there can be moderates in an Islamist militia that enforces medieval practices).

In the past year, the U.S. military and intelligence have carried out a series of air and drone strikes and ground commando attacks from Afghanistan in Pakistan’s tribal Waziristan region against the Pakistani Taliban, the nemesis of the Pakistani military. The CIA alone has admitted carrying out a dozen drone strikes in Waziristan to avenge the bombing of its base in Khost, Afghanistan, by a Jordanian double agent, who in a prerecorded video said he was going to take revenge for the U.S. attack — carried out at Pakistan’s instance — that killed the Pakistani Taliban chief, Baitullah Mehsud.

Yet, the U.S. military and intelligence have not carried out a single air, drone or ground attack against the Afghan Taliban leadership in Baluchistan, south of Waziristan. The CIA and the ISI are again working together, including in shielding the Afghan Taliban shura members so as to facilitate a possible deal.

Obama’s Afghan strategy should be viewed as shortsighted and apt to repeat the very mistakes of American policy on Afghanistan and Pakistan over the past three decades that have come to haunt U.S. security and that of the rest of the free world.

Washington is showing it has not learned any lessons from its past policies that gave rise to monsters like Osama bin Laden and Mullah Omar and to "the state within the Pakistani state," the ISI, which was made powerful during Ronald Reagan’s presidency as a conduit of covert U.S. aid for Afghan guerrillas fighting Soviet occupiers.

To justify the planned Faustian bargain with the Taliban, the Obama team is drawing a specious distinction between al-Qaida and the Taliban and illusorily seeking to differentiate between "moderate" Taliban and those that rebuff deal-making.

The scourge of transnational terrorism cannot be stemmed if such specious distinctions are drawn. India, which is on the frontline of the global fight against international terrorism, is likely to bear the brunt of the blowback of Obama’s Afpak strategy, just as it came under terrorist siege as a consequence of the Reagan-era U.S. policies.

The Taliban, al-Qaida and groups like the Lashkar-e-Taiba are a difficult-to- separate mix of soul mates who together constitute the global jihad syndicate. To cut a deal with any constituent of this syndicate will only bring more international terrorism. A stable Afghanistan cannot emerge without dismantling the Pakistani military’s sanctuaries and sustenance infrastructure for the Afghan Taliban and militarily decapitating the latter’s command center in Baluchistan. Instead of seeking to achieve that, the U.S. is actually partnering the Pakistani military to win over the Taliban.

Even if the Obama administration managed to bring down violence in Afghanistan by doing a deal with the Taliban, the Taliban would remain intact as a fighting force, with active ties to the Pakistani military. Such a tactical gain would exact serious costs on regional and international security by keeping the Afpak region as the epicenter of a growing transnational-terrorism scourge and upsetting civilian reconstruction in Afghanistan, where Japan and India are two of the largest bilateral aid donors.

Regrettably, the Obama administration is falling prey to a long- standing U.S. policy weakness: The pursuit of narrow objectives without much regard for the interests of friends.

Brahma Chellaney, professor of strategic studies at the privately funded Center for Policy Research in New Delhi, is a regular contributor to The Japan Times.

The Japan Times: Sunday, Feb. 7, 2010

Stagecraft and Statecraft

Author Archives: Chellaney

About Chellaney

Full official text and key features of U.S.-India reprocessing agreement

Ensuring resource security: From a local problem to a global challenge

India’s Civil Liability for Nuclear Damage Bill

A radioactive Bill fraught with big risks

India’s nuclear-accident liability law: An anti-market bill that weakens safety

India’s “graduated” approach to talks with Pakistan

Brahma Chellaney

Learning from a failed summit

Planned U.S. Faustian bargain with the Taliban

Surge, bribe and run

Washington has learned nothing from past policies

Nuclear-accident liability

U.S. policy drift on Afpak

Obama’s Afghan policy: Surge, bribe and run