Prime Minister returns with little from Washington

Posted on December 9, 2009 by Chellaney

A deal gone sour

Brahma Chellaney

DNA newspaper, November 27, 2009

The ritzy state dinner US President Barack Obama hosted in honour of Indian Prime Minister Manmohan Singh at the White House could not obscure the fact that Singh’s visit yielded little in substance. The elaborate pomp and ceremony also did little to change perceptions in India that it has lost ground in America’s Sino-centric Asia policy. During the presidency of George W Bush, many in India had whipped themselves into rapturous frenzy over what they saw as a tectonic shift in US policy toward India. All it required to shatter their bliss (and belief) was a change of government in Washington.

The lesson: Unlike India’s personality-driven, sentiment-laced approach, US foreign policy is shaped by institutional processes that preclude abrupt U-turns or shifts. To be sure, Bush was India-friendly. But he left office without translating his thinking into concrete policy guidance to various departments to treat India as a strategic priority. In the absence of a national security directive to the powerful State Department, Pentagon and Commerce Department bureaucracies that run day-to-day aspects of India policy, the vaunted Indo-US nuclear deal has failed to deliver tangible strategic benefits, or even to promote joint defence research and development. US export controls on high technology continue to target India like before.

The developments since 2008 actually hold the most-sobering lesson for Singh, who staked his political reputation to push through the nuclear deal. He peddled the deal as a transformative initiative that would help put the Indo-US relationship on a much-higher pedestal. But more than a year after the deal came to fruition there is no sign of its transformative power. Rather, India now is concerned about its diminished role in US foreign policy. Despite a much-celebrated strategic partnership between the world’s most-populous democracies, the US values India more as a market for its goods and services than as a collaborator on pressing strategic issues. Indeed, just as it has been balancing its relationships with India and Pakistan for long, Washington now is balancing its ties with India and China.

The nuclear deal itself is turning sour. It will take a decade or so before the first imported nuclear-power reactor begins to generate electricity. The economics of generating power from imported reactors hasn’t even been discussed. Costs are likely to be so high as to saddle Indian taxpayers with a major subsidy burden. Two nuclear-power plants currently under construction in Finland and France are billions of dollars over budget and years behind schedule.

Despite a strong US push to bag major reactor contracts and New Delhi’s action in reserving two nuclear parks exclusively for American firms, no reprocessing agreement could be clinched during Singh’s visit. Key differences remain over such an agreement, which would have to pass US congressional muster. Singh went to Washington after getting his Cabinet to approve a nuclear-accident liability bill, which seeks to cap liability at a mere $537 million (Rs2,500 crore) and makes the Indian state-run operator, rather than the foreign supplier, liable for compensation payment. Parliament must seize the opportunity when this bill is tabled to examine in full the nuclear deal, which thus far has escaped legislative scrutiny in India. The bill — intended to provide cover mainly to US firms, which, unlike France’s Areva and Russia’s Atomstroyexport, are in the private sector — seeks to further burden Indian taxpayers, rather than put the onus on the sellers of multibillion-dollar reactors.

If anything, Singh’s visit was a reminder that Obama’s tilt towards China on key Asian issues and growing US reliance on and aid for Pakistan have emerged as major sticking points in the Indo-US relationship. The policy frame in which Washington is viewing India is not the larger Asian geopolitical landscape, but the southern Asian context. But even on regional matters, the US has on occasion sought to pursue approaches antithetical to India’s vital interest. Also, at a time when Sino-Indian border tensions have escalated, Washington has failed to even caution China against any attempt to forcibly change the territorial status quo.

But more than Washington, New Delhi is to be blamed. The deal-peddlers in India allowed their wishful thinking to blind them to the strategic trends that were firmly set long before Obama came to the White House. Take the China factor. Bush left office with a solid China-friendly legacy, best illustrated by the manner in which he ignored the Chinese crackdown in Tibet and showed up at the Beijing Olympics. The talk of a US-China diarchy — a G2 — ruling the world had begun before Obama was elected. It was also under Bush that the US renewed its aid to Pakistan on a massive scale, while pressuring India not to take the mildest diplomatic sanctions against Islamabad after 26/11. Clearly, the deal was oversold.

The writer is Professor Strategic Studies, Centre for Policy Research, New Delhi.

http://www.dnaindia.com/opinion/main-article_a-deal-gone-sour_1316954

The lessons the U.S.-India nuclear deal holds

Posted on October 9, 2009 by Chellaney

Counting the costs of a vaunted deal

Brahma Chellaney

The Hindu newspaper, October 9, 2009

On the first anniversary of its coming to fruition, the much-trumpeted Indo-U.S. nuclear deal stands out as an overrated initiative whose conclusion through patent political partisanship holds sobering lessons for India.

For United States President George W. Bush and Indian Prime Minister Manmohan Singh, the nuclear deal was a prized legacy-building issue. Mr. Bush ensured the deal wasn’t a divisive subject at home by forging an impressive bipartisan consensus. By contrast, Dr. Singh’s polarising single-mindedness on the ballyhooed deal and refusal to permit parliamentary scrutiny injected intense partisan rancour into the debate. Given that India may have to assume new international legal obligations on other fronts too — from climate change to the Doha Round of world-trade talks — the noxious precedent set by the deal must be corrected in national interest.

The deal indeed was a milestone, symbolising the deepening ties between the world’s oldest democracy and largest democracy. But on the first anniversary of its coming to fruition, the deal stands out as an overvalued venture whose larger benefits remain distant for India, including an end to dual-use technology controls and greater U.S. support in regional and global matters. The deal offers more tangible benefits to the U.S. While significantly advancing U.S. non-proliferation interests, the deal — embedded in a larger strategic framework — fashions an instrumentality to help co-opt India in a “soft alliance.” It also carries attractive commercial benefits for the U.S. in sectors extending from commercial nuclear power to arms trade.

To be sure, the deal-making was a tortuous, three-year process, involving multiple stages and difficult-to-achieve compromises. At its core, the deal-making centred on India’s resolve to safeguard its nuclear military autonomy and America’s insistence on imposing stringent non-proliferation conditions, including a quantifiable cap on Indian weapons-related capabilities. Eventually, a deal was sealed that gave India the semblance of autonomy and America some Indian commitments to flaunt, best epitomised by the decision to shut down Cirus — one of India’s two research reactors producing weapons-grade plutonium. No sooner had Congress ratified the deal package than the White House made clear the deal was predicated on India not testing again, with “serious consequences” to follow a breach of that understanding.

The more recent G-8 action barring the transfer of enrichment and reprocessing (ENR) equipment or technology to non-NPT signatories even under safeguards is a fresh reminder that while New Delhi is taking on legally irrevocable obligations that tie the hands of future Indian generations, America’s own obligations under the deal are unequivocally anchored in the primacy of its domestic law and thus mutable. If there were any doubts on that score, they were set at rest by the American ratification legislation that gave effect to the deal, the U.S.-India Nuclear Cooperation Approval and Non-Proliferation Enhancement Act of 2008, or NCANEA. This Hyde Act-plus legislation unabashedly declares that the bilateral 123 Agreement is subservient to existing U.S. law and “any other applicable United States law” enacted henceforth.

That the U.S. has used the G-8 mechanism to deny India the “full” cooperation it bilaterally pledged shouldn’t come as a surprise because the NCANEA obligates Washington to spearhead a Nuclear Suppliers Group ban on ENR transfers. Having formally proposed such a ban in the NSG, Washington got the G-8 to act first — a move that puts pressure on the NSG to follow suit and, more importantly, brings on board in advance all potential ENR-technology suppliers to India. Even on the unrelated and unresolved issue of granting India an operational right to reprocess U.S.-origin spent fuel, the U.S. government has notified Congress that such permission, while subject to congressional approval, would be revocable.

For years to come, the deal will generate eclectic controversies because it is rife with unsettled issues, ambiguities and the avowed supremacy of one party’s variable domestic law. To help the beleaguered Indian government save face, some issues — ranging from a test prohibition to the political nature of fuel-supply assurances — were spelled out not in the bilateral 123 Agreement but in the subsequent U.S. presidential statements and NCANEA. As a result, the final deal gives America specific rights while saddling India with onerous obligations.

Politically, the deal was oversold as the centrepiece, if not the touchstone, of the new Indo-U.S. partnership to the extent that, a year later, New Delhi seems genuinely concerned about India’s declining profile in American policy. Clearly, New Delhi had over-expectations about what the deal would deliver.

Still, there are some key lessons New Delhi must draw from the way it handled the deal. The first is the importance of building political bipartisanship on critical national matters. Had the Prime Minister done what he repeatedly promised — “build a broad national consensus” — India would have strengthened its negotiating leverage and forestalled political acrimony. Dr. Singh’s approach was to play his cards close to his chest and rely on a few chosen bureaucrats. Not a single all-party meeting was called. Consequently, the government presented itself as deal-desperate on whom additional conditions could be thrust.

A second lesson relates to Parliament’s role. Even if there is a lacuna in the Indian Constitution that allows the executive branch to sign and ratify an international agreement without any legislative scrutiny, a forward-looking course would be to plug that gap by introducing a constitutional amendment in Parliament, rather than seek to exploit that weakness.

Sadly, the government chose not to place the final deal before Parliament even for a no-vote debate before it rushed to sign the 123 Agreement on September 10, 2008, just two days after Mr. Bush signed NCANEA into law. This extraordinary haste occurred despite Dr. Singh’s July 22, 2008 assurance in the Lok Sabha that after the entire process was complete, he would bring the final deal to Parliament and “abide” by its decision. But no sooner had the process been over than the government proceeded to sign the 123 Agreement without involving Parliament, although the deal imposes external inspections in perpetuity and leaves no leeway for succeeding governments. A year later, Dr. Singh has yet to make a single statement in Parliament on the terms of the concluded deal, lest he face questions on the promises he couldn’t keep, including the elaborate benchmarks he had defined on August 17, 2006.

In the future, Parliament must not be reduced to being a mere spectator on India’s accession to another international agreement, even as the same pact is subject to rigorous legislative examination elsewhere. In fact, when the government tables the nuclear-accident liability bill, Parliament ought to seize that opportunity to examine the nuclear deal and its subsidiary arrangements. The bill — intended to provide cover mainly to American firms, which, unlike France’s Areva and Russia’s Atomstroyexport, are in the private sector — seeks to cap foreign vendors’ maximum accident liability to a mere $62 million, although each nuclear power station is to cost several billion dollars.

Yet another lesson is to stem the creeping politicisation of top scientists. This trend has drawn encouragement from two successive governments’ short-sighted use of topmost scientists for political purpose. Such politicisation was on full display during the nuclear deal process. The top atomic leadership made scripted political statements in support of deal-related moves, only to be rewarded with special post-superannuation extensions beyond established norms. The current unsavoury controversy among scientists over India’s sole thermonuclear test in 1998 — and the atomic establishment’s frustration over the attention dissenting views are receiving — is a reflection of the damage to official scientific credibility wrought by the deal politics. All this only underscores the need to bring the cosseted nuclear programme under oversight.

If truth be told, national institutions have been the main losers from the partisan approach and divisive politics that the deal came to embody. The deal divided the country like no other strategic issue since Indian independence, with the deteriorating national discourse reaching a new low. Such divisiveness, in turn, seriously weakened India’s hand in the deal-related diplomacy. A new brand of post-partisan politics must define India’s approach in Copenhagen and the Doha Round.

A final sobering lesson: Key national decisions must flow from professional inputs and institutional deliberations, not from gut opinions in which near-term considerations or personal feelings and predilections of those in office prevail over the long view of national interest. The lodestar to avoid disconnect between perception and reality is to ensure that any agreement bears the imprint of institutional thinking, not personal fancy.

(Brahma Chellaney is Professor of Strategic Studies at the Centre for Policy Research in New Delhi.)

Strategic and technical aspects of End-Use Monitoring Agreement

Posted on July 27, 2009 by Chellaney

End-use monitoring woes for India

Brahma Chellaney The Hindu newspaper July 27, 2009

While the U.S. has trumpeted the End-Use Monitoring Agreement as a “landmark event,” the Indian government has fought shy of taking Parliament into confidence, placing on record only two sentences thus far

The U.S. has hailed the End-Use Monitoring Agreement (EUMA) with New Delhi as a “landmark event” and “a very significant agreement” — one that brings India into the “nonproliferation mainstream” and “is part of the fulfilment” of the nuclear deal. U.S. officials say the accord opens the path to mega deals on arms supplies to India. By contrast, New Delhi assiduously has sought to downplay EUMA’s importance and sidestepped its linkage to the nuclear deal, given that the Prime Minister had twice told Parliament — the last time on July 22, 2008 — that there are “no secret or hidden” understandings “over and above the documents made public.”

But EUMA is no insignificant accord: It imposes on India conditions that no other arms-supplying state has ever sought. Yet, the arms the U.S. is selling India are not the top-of-the-line weapons — a reality EUMA’s conclusion is unlikely to change. In fact, the U.S. has transferred to Pakistan weapon systems matching those on sale or offer to India, especially big-ticket items like maritime reconnaissance aircraft, military transport planes and fighter-jets. Today, while Washington seeks to sell India 1970s-era F-16s or F-18s in an $11-billion deal, Japan debates the merits of F-22s versus F-35s for air superiority.

To be sure, India has sought to cement its strategic relationship with the U.S. by buying some American arms. Money, after all, matters a lot to U.S. diplomacy. Buying U.S. arms may jibe with India’s arms-diversification policy, but such imports, by no stretch of imagination, are critical to India’s defence. In fact, much of India’s imported weaponry in the approaching years will continue to come from other suppliers, principally Russia, Israel and France, in that order. But if the U.S. can inflict restrictive and invasive conditions, despite being a new supplier, will it embolden other suppliers to seek end-use rights in India and emulate U.S.-style sales to rivals?

Let’s be clear: EUMA is rooted in the extraterritorial application of U.S. law, which demands “reasonable assurance” that the recipient state is complying with American regulations regarding the use and security of defence articles and services. The avowed aim is to enhance American national-security and foreign-policy objectives.

There are three separate end-use monitoring (EUM) programmes. The Pentagon-administered EUM — known in U.S. parlance as the “Golden Sentry” programme — applies only to government-to-government defence contracts (like the ones signed with India in recent years) and imposes stringent “cradle-to-grave” obligations on the recipient state covering the use and final disposition of transferred items, with the U.S. holding “reversionary rights” to take back equipment no longer needed. Direct commercial sales fall under the State Department’s “Blue Lantern” programme. The Commerce Department’s “Extrancheck” monitors dual-use items exported by U.S. industry via the Export Administration Regulation (EAR).

Negotiated with New Delhi over a three-year period, the all-embracing EUMA has some clauses that few can object to, such as a prohibition on second-hand sales. But it also has several controversial provisions that arm Washington with considerable leverage. EUMA explicitly restricts what India can do with the U.S.-origin defence equipment. Under its terms, India cannot modify the imported weapon system in any form. Also, to keep the importing state dependent on the U.S., EUMA restricts India from getting U.S.-sold defence equipment serviced by any another country without prior American permission. Even spare parts need to be sourced only from America.

More importantly, the U.S. has been granted the right to periodically carry out an inspection and physical inventory of all articles transferred to India. A EUMA provision mandates that “the U.S. government will be permitted, at its discretion, to conduct an inspection and physical inventory of all articles and services transferred” and that, upon request, “the inventory and accountability records maintained by the purchaser will be made available to the U.S. personnel” conducting the inspection.

In the negotiations, India had strenuously objected to physical inspection and instead sought a scrutiny of the records and other accountability measures in place. After all, EUMA requires India to maintain good internal accountability and keep records of inventories and items consumed, expended and damaged. In the end, the Americans had their way, but it was agreed the physical inspection would be done at a time and place granted by India. To carry out an inspection, U.S. officials would need the recipient state’s assistance, including on the equipment’s location. So surprise inspections are precluded anyway. To prevent U.S. personnel from visiting sensitive military sites, the Indian government intends to move U.S.-origin defence equipment to a non-sensitive place before any inspection — an onerous task that at times may involve removing a U.S.-sold system from the platform into which it has been integrated.

No less significant is America’s right to check that India is using any purchased weapon for the purpose for which it was intended. This may mean that a system bought by India to bolster defences against China cannot be deployed against Pakistan, still a valued strategic pawn for U.S. policy. EUMA gives the U.S. the “right to verify” that a transferred system was not being used for purposes other than those agreed upon. Change in the end-use of any U.S.-origin component or system without Washington’s authorisation will constitute a EUMA violation.

It is such restrictions that had prompted the Indian Navy chief last year to publicly reject EUMA as too “intrusive.” The U.S., on an ad hoc basis, already has included end-use rights for itself in the recent defence contracts. In a March 2008 report, the CAG had castigated the grant of such rights, pointing out that the contract for USS Trenton — a 1971-vintage, problem-plagued amphibious transport ship bought by India in 2007 for $50 million — contains even “restrictions on the offensive deployment of the ship.” Now, EUMA, with its comprehensive end-use stipulations, will serve as the umbrella arrangement covering all future defence deals.

Yet, despite the misgivings expressed within and outside the officialdom, a tongue-tied Indian government has shied away from taking Parliament into confidence, with the External Affairs Minister’s July 21 statement in both Houses containing just two sentences on EUMA. Shouldn’t the Prime Minister explain to Parliament how an agreement designed by the U.S. for client states meshes with India’s strategic autonomy and its right of unfettered deployment and use of weapons bought with hard cash? The government bill proposing that Indian taxpayers assume main nuclear-accident liability, with foreign vendors’ maximum liability limited to a mere $62 million, will give Parliament finally a chance to examine the nuclear deal and its connection to accords like EUMA.

Although India is America’s strategic partner, not an ally that is supposed to follow the alliance leader, the U.S. is attempting to co-opt India in a “soft alliance” through assorted arrangements. The 2005 defence framework accord, with its emphasis on U.S. arms sales, force interoperability and intelligence sharing, was designed to build India as a new junior partner (or spoke) in a web of interlocking bilateral arrangements that fit together with America’s hub-and-spoke global alliance system. The subsequent nuclear deal, with its elaborate terms extending beyond the nuclear realm, was an initiative in the same direction that helped give birth to EUMA, which incorporates both routine inspections and “enhanced” end-use monitoring. It seems odd, though, that U.S. policy should attempt to mould India into a “soft” ally in a world in which some of America’s old allies are seeking to discreetly reclaim their foreign-policy autonomy.

Make no mistake: The U.S. has imposed EUMA on states that are under its security protection or classified as allies. But India is a notable exception as the only EUMA-accepting country that has a special defence relationship with Russia, which is transferring to India strategic systems America will not even consider selling — from a nuclear attack submarine to an aircraft carrier. China complains Russia won’t sell it the same class or quality of weapons it gives India.

A close, mutually beneficial relationship with the U.S. is in India’s interest. But as India gets sucked into the U.S. strategic dominion through EUMA and other arrangements — with the Communications Interoperability and Security Memorandum of Agreement (CIS MoA) next on Washington’s list, along with the Mutual Logistic Support Agreement (MLSA) — its special relationship with Moscow is bound to change. If America can merrily sell growing quantities of arms on both sides of the subcontinental divide and yet get New Delhi to accept restrictive measures, an economically struggling Russia has little incentive to stick to its traditional policy of not exporting arms to Pakistan. And with India hopelessly dependent on conventional-arms imports to meet basic defence meets, this means a rougher Indian defence-procurement trajectory in the years ahead. After all, as the pattern of current arms sales and offers underscores, American transfers are intended not to help India gain a combat edge but to promote regional military balance and U.S. leverage.

Factsheet on U.S-India accord on end-use monitoring

Posted on July 22, 2009 by Chellaney

End-Use Monitoring Agreement (EUMA): A Backgrounder

Brahma Chellaney India Abroad July 31, 2009

The U.S. had been pressing India to sign three agreements related to defense cooperation:

1. End Use Monitoring Agreement (EUMA).

2. Communications Interoperability and Security Memorandum of Agreement (CIS MoA).

3. Mutual Logistic Support Agreement (MLSA).[*]

All these agreements contain a series of restrictive clauses.

On the eve of U.S. Secretary of State Hillary Clinton’s July 2009 New Delhi visit, the newly appointed U.S. assistant secretary of state for public affairs, Philip J. Crowley, had linked EUMA to the nuclear deal. He told the media in Washington on July 17 that EUMA was “part of the fulfillment of an important initiative that India and the U.S. have signed in the area of nuclear cooperation.”

“We are working with India on an end-use agreement,” said Crowley, the State Department spokesperson. “But clearly, this is part of the fulfillment of an important initiative that India and the United States have signed in the area of nuclear cooperation.” Crowley went on to say that he was “sure” there will be “substantial discussion” during Mrs. Clinton’s visit on “fulfilling the initiative and its various components.”

Contrast this with what Prime Minister Manmohan Singh told the Lok Sabha on July 22, 2008: “Some people are spreading the rumors that there are some secret or hidden agreements over and above the documents made public. I wish to state categorically that there are no secret or hidden documents other than the 123 Agreement, the Separation Plan and the draft of the safeguards agreement with the IAEA.”

Earlier, on August 4, 2005, he told the Rajya Sabha: “Sir, what are the commitments that I have taken? I am very clear in my mind and I can assure the House that there is no secret appendage or secret agreement. Everything that I discussed with the President [Bush] is faithfully stated. There is nothing more to our agreement than what is stated in this Joint Statement.”

EUMA CLAUSES

All these three agreements were designed by the U.S. Congress for ensuring American oversight, right-of-access and on-site inspection in client states — states that are under the U.S. security and nuclear umbrella. For example, there are 32 countries under the U.S. nuclear and security umbrella today. In addition, there are states like Pakistan that are officially classified by Washington as Major Non-NATO Ally (MNNA) — a conferred status that gives the U.S. virtually the same rights over them as it has vis-à-vis states formally under the American military umbrella.

The special rights the U.S. has with client states are understandable because America is responsible for their security and it thus seeks to underpin its own obligations and those of its allies through such agreements.

But India is not a client state, but a strategic partner of the United States. Unlike an ally who has to follow the alliance leader, a strategic partnership is built on the principle of equality. Thus, a strategic partner is an equal, at least in theory.

Yet, the U.S. has succeeded in imposing the End Use Monitoring Agreement (EUMA) on India.

The Pentagon is in charge of implementation of
EUMA, known in U.S.
parlance as the “Golden Sentry” program, with the mission to “monitor the use of defense
articles and services provided to foreign customers or international
organizations through government-to-government programs.” The Pentagon says the Golden Sentry’s main
objective is to “minimize security risks through compliance with arms-transfer provisions supporting U.S. national
security and foreign-policy objectives.”

The legal basis of EUMA — or Golden Sentry — is a
1996 amendment to the U.S. Arms Export Control Act (AEC). Section 40A of the
AECA on end-use monitoring of defense articles and defense services calls for
“reasonable assurance” of compliance of U.S. laws and regulations by
recipient states. This is just one example of how the United States
seeks to give extra-territorial jurisdiction to its laws and regulations.

The Pentagon’s Golden Sentry rules
apply to government-to-government defense contracts and impose “cradle-to-grave”
obligations, starting from shipment of a defense article to its use and final
disposition. By contrast, the State Department-run “Blue Lantern” program
focuses on Direct Commercial Sales (DCS)/Export Licensing (USML articles). “Blue
Lectern” end-use checks cover direct military sales and are conducted by U.S. mission personnel abroad or personnel from
the State Department’s Directorate of Defense Trade Controls (DDTC) to verify
the destination and specific end-use and end-users of U.S. commercial
defense exports. The “Golden Sentry,” in contrast, requires a comprehensive end-use monitoring
program for arms transfers authorized by the Arms Export Control Act (AECA) and the Foreign Assistance Act
of 1961 (FAA), as amended.

Negotiated with New Delhi over a three-year period, the
Indo-U.S. EUMA is controversial.

Some of its clauses may not be a subject of concern, such as prohibitions on second-hand sales without approval of the United States.

But its contentious clauses impose restrictions on what India may do with the equipment it buys from USA.

►EUMA will allow the U.S. to periodically carry out an inspection and inventory of all articles transferred to India. In the negotiations, India strenuously objected to physical inspection and instead sought an inspection of the records and other measures in place. In the end, the Americans had their way, but it was agreed that the physical inspection would be done at a time and place granted by India. Supplying-state officials, in any case, would need visas and other assistance from the recipient state, including about the location of the equipment, to carry out an inspection. So surprise inspections are precluded anyway. But to prevent U.S. personnel from visiting sensitive military sites, the Indian government intends to move U.S.-origin defense equipment to a non-sensitive place before any inspection.

►The U.S. will have the right to check that India is using any purchased weapon for the purpose for which it was intended. This could mean that a weapon system bought by India to bolster defenses against China cannot be deployed against Pakistan, a failing state American policy just won’t let fail.

►EUMA restricts what the purchasing country, India, can do with the U.S.-origin defense equipment, even within its own borders.

►Under the terms of EUMA, India cannot modify the purchased defense article or system in any form.

►Also, to prevent the buyer country from freeing itself from dependency on the United States for maintenance, EUMA restricts India from getting U.S.-origin defense equipment serviced by any another country without prior American permission. Even spare parts need to be sourced only from the United States.

These "cradle-to-grave" restrictions arm Washington with continuing leverage over the recipient country. After all, any equipment or system needs maintenance. Such leverage, in turn, can help ensure that the recipient country cooperates with Washington on larger political matters.

THE AGREED TEXT

A key element of U.S. Secretary of State Hillary Clinton’s India trip was the announcement that the two sides had reached accord on EUMA. Although the "Golden Sentry" is a Pentagon program, Mrs. Clinton’s desire to show her visit as successful prompted her to exert sufficient pressure on India to clinch EUMA during her stop in New Delhi. The Joint Statement issued at the end of her visit recorded: "External Affairs Minister Krishna announced that both sides had reached agreement on End-Use Monitoring for U.S. defense articles."

The agreed text of EUMA was exchanged by External Affairs Minister Krishna and Clinton on July 20, 2009. It, however, was not formally signed because it takes the form of agreed language to be included in contracts for all future U.S. defense sales to India.

Although the agreed language deviates in some aspects from the standard EUMA text applicable to client states, the United States managed to get India to accept the core conditions.

The United States already has been including end-use monitoring rights for itself in the sale of all defense equipment to India. Such end-use monitoring rights have been incorporated in the Letter of Offer and Acceptance (LOA) relating to every defense contract with India in recent years, including the contracts for:

(i) USS Trenton — a 1971-vintage amphibious transport ship, bought by India in 2007 for $50 million and renamed “INS Jalashva.”

(ii) The $2.2 billion deal with Boeing for eight P-8I maritime patrol aircraft.

(iii) Six C130-J Hercules military transport aircraft worth more than $1 billion.

(iv) Three VVIP Boeing business jets.

The U.S. right to end-use monitoring is also incorporated in the export contracts of U.S. high-term items to India, starting with the Cray X-MP-14 supercomputer in the late 1980s. But EUMA relates to defense-equipment transfers and contains detailed and elaborate restrictions.

Now the EUMA language agreed to between India and the U.S. will become the standard in all future Indo-U.S. defense contracts. "We have agreed on the end-use monitoring arrangements that will henceforth be referred to in letters of acceptance for Indian procurement of US defense technology and equipment,” External Affairs Minister S.M. Krishna told Parliament on July 21, 2009. “This systematizes ad hoc arrangements for individual defense procurements from the USA entered into by previous governments.”

EUMA comes as a major boost to American arms companies like Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp. eying megadeals in India, one of the world’s largest importers of conventional weapons.

Indeed, EUMA opens the path for the U.S. and India to agree to the terms of the Communications Interoperability and Security Memorandum of Agreement (CIS MoA), which is still under negotiation.

As its name suggests, that agreement seeks to promote interoperable
tactical communications (“comms”) systems, including Spread Spectrum
comms systems, and to institute secure comms interoperability between the two
sides through the U.S.
supply of Communications Security (COMSEC) equipment and services.

OFFICIAL CONCERN IN INDIA

The Indian government has embraced EUMA despite concerns expressed within the official establishment over its restrictive and invasive clauses.

For example, Navy chief Admiral Suresh Mehta had publicly described EUMA as “intrusive.” Speaking at an April 2008 conference organized by the London-based International Strategic Studies Institute in New Delhi, Admiral Mehta said:

"There are certain things we can’t agree to. As a sovereign nation, we can’t accept intrusiveness into our system, so there is some fundamental difficulty."

He added: “The U.S. may have this kind of (end user) agreements with everyone. I don’t believe in that. We pay for something and we get some technology. What I do with it, is my thing.’‘

In fact, India’s Comptroller and Auditor General (CAG) in a March 2008 report criticized the end-use monitoring clauses in the contract for USS Trenton/INS Jalashva. (No sooner the U.S. had transferred that transport ship to India than a gas leak killed an Indian officer and five sailors on board.)[†]

The CAG report stated: “Restrictive clauses raise doubts about the real advantages from this deal… For example, (there are) restrictions on the offensive deployment of the ship and permission to the (U.S.) government to conduct an inspection and inventory of all articles transferred under the end-use monitoring clause of the LOA (Letter of Offer and Acceptance issued by the US government).”

Note that
the contract contains even “restrictions on the offensive deployment of
the ship.”

Given this background, the Indian government ought to have taken Parliament into
confidence on the EUMA, rather than place on record just the two sentences on the
agreement found in Krishna’s statement on Mrs.
Clinton’s visit. While
Prime Minister Manmohan Singh’s government fights shy to reveal the terms of
the agreement to Parliament and to answer specific concerns, State Department
has called the EUMA with India “a landmark event,” with spokesman Robert
Wood going on to say: “We’re very proud, and we believe that this agreement
between the U.S. and India is important in our overall global nonproliferation
efforts, and we believe that this agreement has brought India into the nuclear
nonproliferation mainstream.”

[*] The MLSA envisages exchange of services and logistics. If it gets signed, the Indian and American militaries will provide logistic support, berthing and refueling facilities to each other’s warships and aircraft on a barter or equal-value exchange basis. But given that the Indian military, including the navy, has no deployments or operations outside the region, the MSLA, in effect, would be a one-sided arrangement.

[†] The purchase of the USS Trenton was severely criticized by the Comptroller and Auditor General, which in its report raised several questions, including why the ship was bought when the U.S. Navy itself had concluded in 2003 that the ship was not suitable for modernization and ought to be decommissioned by 2006. The report pointed out that gas leaks on board other Trenton-type ships had killed three American sailors.

(c) India Abroad

U.S.-India nuclear deal: Bereft of transformative power

Posted on May 1, 2009 by Chellaney

After the euphoria, the harsh reality

Brahma Chellaney

The Hindu newspaper, May 1, 2009

The much-trumpeted Indo-U.S. nuclear deal has failed to yield strategic benefits for India. Indeed, such is its burden that even as U.S. policy ignores vital Indian interests in the region, New Delhi stays mum.

The U.S.-India nuclear deal was promoted as a transformative initiative — one that would put the bilateral relationship on a much-higher pedestal. In his valedictory speech, President George W. Bush declared: “We opened a new historic and strategic partnership with India.” By contrast, Prime Minister Manmohan Singh has not made a single statement on the deal — not even to Parliament — ever since the vaunted deal came to fruition, other than to admit recently that he got his party to back the deal by threatening to resign.

Dr. Singh’s reticence has to do with the fact that the conditions and riders the U.S. Congress attached while ratifying the deal demolished the assurances he had made to Parliament. Consequently, Dr. Singh was unable to keep the promise he made to the Lok Sabha last July 22: “I will come to Parliament before operationalizing the nuclear agreement.” On several occasions before the deal was set in cement, Dr. Singh, however, had trumpeted its transformative character.

Seven months after the deal’s realization, there is no sign of its transformative power. Rather, doubts have arisen over the supposed “global strategic partnership” with America. The policy frame in which Washington is viewing India is not the larger Asian geopolitical landscape, but the southern Asian context. But even on regional matters of vital interest to India, the U.S. has sought to ignore New Delhi or pursue antithetical policy approaches. To the chagrin of Indian neocons — who ingenuously marketed the nuclear deal as a U.S. move to build India as a world power and counterweight to China — Washington has declared that its “most important bilateral relationship in the world” is with Beijing.

Those who rammed through the deal — even if it meant stunting India’s nuclear-deterrent development — blame the new U.S. administration for downgrading India’s importance and being unsympathetic to its security concerns. Actually, it’s the deal-pushers who are to blame for allowing their wishful thinking to blind them to the strategic trends that were firmly set long before Barack Obama came to the White House.

Take the China factor. America and the Soviet Union took three decades to achieve mutually assured destruction (MAD). During Bush’s presidency, America and China became locked in MAD — not in military but in economic terms. The two now are so tied in a mutually dependent relationship for their economic well-being that attempts to snap those ties would amount to mutually assured destruction. Just as the beleaguered U.S. economy cannot do without continuing capital inflows from China, the American market is the lifeline of the Chinese export juggernaut.

It was thus no surprise that Bush left the White House with a solid China-friendly legacy, best illustrated by the manner in which he ignored the Chinese crackdown in Tibet and showed up at the Beijing Olympics. It wasn’t a surprise either that Hillary Clinton paid obeisance in Beijing soon after her appointment as secretary of state, going to the unusual extent of publicly demoting human rights and emphasizing economic, environmental and security relations with China. Today, there is talk even of a US-China diarchy — a G-2 — ruling the world. The naïveté of Indian neocons was astonishing.

Take the Mumbai terrorist assaults. After Pakistan-based elements orchestrated those unparalleled attacks, two successive U.S. administrations leaned on India to refrain from imposing the mildest diplomatic sanctions against Islamabad. As Mrs. Clinton candidly admitted before a congressional panel on April 23, “We worked very hard, as did the prior administration, to prevent India from reacting.” That admission explains why Dr. Singh did not take the smallest of small steps against Pakistan — even as a symbolic expression of India’s outrage — despite saying in public that “some Pakistani official agencies must have supported” those attacks.

Take another example. India got no tangible help from the Bush or Obama administration to bring the plotters of the Mumbai strikes to justice, despite providing extraordinary access to the Federal Bureau of Investigation to independently investigate those attacks and even allowing the CIA to serve as a conduit for intelligence exchange with Islamabad. Rather, Washington wants India now to rise above the Mumbai attacks and aid Obama’s “Afpak” strategy by giving Pakistan a tranquil eastern border through troop redeployments.

The U.S. message to India is to forget Mumbai and silently suffer Pakistan’s war by terror — a message reinforced by Washington’s identification of terrorist safe havens only along Pakistan’s western border. Mrs. Clinton indeed suggested India endure more Mumbais stoically by telling Congress, “So, we do have a lot of work to do with the Indian government, to make sure that they continue to exercise the kind of restraint they showed after Mumbai, which was remarkable, especially given the fact that it was the political season.”

Take yet another case. The re-hyphenation of India with Pakistan today is complete. India now figures in U.S. calculations principally in relation to Pakistan and Obama’s new Afpak strategy. This poorly conceived strategy is doomed to fail. And its means and ends are sure to engender more terrorist attacks against India, already bearing the brunt of the blowback from past failed U.S. policies.

The re-hyphenation, however, flows not from a policy decision in Washington but from the disappearance of an optical illusion called “de-hyphenation.” As American scholars Lloyd and Susanne Rudolph have written, “For roughly 50 years, the U.S. destabilized the South Asia region by acting as an offshore balancer. Its actions allowed Pakistan to realize its goal of ‘parity’ with its much-bigger neighbour and to try to best that neighbour in several wars.” But with Pakistan’s descent into chaos and India’s economic rise, the U.S. had no choice in this decade but to advance ties with India, to quote Mrs. Clinton again, “as part of a wide-ranging diplomatic agenda to meet today’s daunting challenges topped by the situation in Pakistan and Afghanistan.”

Under Bush, U.S. policy simply went from hyphenation to parallelism. That involved building strategic partnerships with and selling arms to both India and Pakistan. No sooner had Bush initiated the Next Steps in Strategic Partnership (NSSP) with India in early 2004 than he caught New Delhi unawares by designating Pakistan a Major Non-NATO Ally (MNNA). His push to sell weapons to India coincided with the U.S. sale of F-16s, P-3C Orions, C-130s, TOW missiles, Aerostat surveillance radars, 155mm self-propelled howitzers and Phalanx systems to Pakistan to help maintain “military balance on the subcontinent.” This decade brought U.S. success in building parallel intelligence-sharing and defence-cooperation arrangements with India and Pakistan, while supposedly pursuing “de-hyphenation.”

On Pakistan — a pawn too valuable for any U.S. administration to stop using for regional objectives — American policy has displayed continuity for long. The fact that Obama, in his first 100 days, has helped put together $15.7 billion in international aid for Islamabad shows the U.S. resolve not to allow Pakistan to fail — a country where, he admits, “we have huge strategic interests.” But it was Bush who let Pakistan rake in a terrorist windfall, as he plied it with sophisticated weapons and more than $12.3 billion in funds, notwithstanding the escalating Pakistani-scripted terror attacks in India after 9/11.

Both under Bush and Obama, the Taliban’s top Afghan leadership (living in Quetta) has received protection not just from the Pakistani intelligence, but also from the CIA, which has not carried out a single drone attack in or around Quetta so that the U.S. retains the option to cut a political deal over Afghanistan. It’s no wonder that even as the Taliban’s sway in Pakistan spreads, Robert Gates, Bush’s and now Obama’s defence secretary, has said the U.S. “would be very open” to a Swat Valley-style agreement in Afghanistan with the Taliban.

For years, the U.S. has played to India’s ego and to Pakistan’s craving for funds and weapons. Bush kept India happy with a grand partnership vision while he pandered to Pakistan’s needs. The very day Bush announced his decision to sell F-16s to Pakistan — a public slap for India — Washington patronizingly offered to “help India become a major world power in the 21st century.” This was lapped up by Indian neocons as a “tectonic shift” in U.S. policy. Similarly, Obama massaged India’s ego by declaring that Richard Holbrooke’s mission would stay restricted to the Afpak belt, only to quietly include Kashmir and India in his envoy’s agenda. Now, Centcom chief Gen. David Petraeus has undiplomatically blurted out the truth to Congress that Holbrooke’s “portfolio very much includes India,” and Holbrooke and he are in “constant touch” with Indian officials.

Deal-peddlers in India overlooked a basic fact: In the U.S., stout institutional processes of policymaking inhibit abrupt shifts, and a deal over a single issue was unlikely to yield a fundamental policy change across the board. Even a change of administration, historically, has not meant a dramatic shift in U.S. foreign policy. That is why Obama, elected on the slogan of change, has thus far not delivered substantive change in foreign policy. By employing softer, more conciliatory language, Obama, however, has sought to package his talk as change by itself.

Today, while India gropes for strategic benefits from the nuclear deal, the U.S. is set to reap non-proliferation and economic benefits once international inspections begin and contracts are signed. It is unfortunate that intense partisan rancour was kicked up in India over an oversold deal, which was pushed through with no public scrutiny, although it thrusts an uneconomical energy choice and carries long-term implications.

How the Indian prime minister broke his promises to Parliament

Posted on October 11, 2008 by Chellaney

Parliament Ambushed

New Delhi has embraced a nuclear deal with no binding fuel-supply assurance; no operational reprocessing right; no permission to build strategic fuel reserves; no entitlement to take corrective measures; and no escape hatch from legal obligations. Worse, solemn commitments to Parliament stand jettisoned.

Brahma Chellaney

The Asian Age, October 15, 2008

Do promises made to Parliament have no sanctity? With the government hastily signing the flawed 123 Agreement with the US last weekend, it is important to recall Prime Minister Manmohan Singh’s assurances that after having completed the negotiating process, he would bring the nuclear deal to Parliament and “abide” by its decision. But no sooner had the process been over than Singh proceeded to sign the 123 Agreement while sidelining Parliament.

This is what Singh had pledged in the Lok Sabha during the brief July session marred by the cash-for-votes scandal: “All I had asked our Left colleagues was: please allow us to go through the negotiating process and I will come to Parliament before operationalising the nuclear agreement. This simple courtesy which is essential for orderly functioning of any government worth the name, particularly with regard to the conduct of foreign policy, they were not willing to grant me”.

Earlier, at a June 30 book-release function at his official residence, Singh had elaborated on his pledge: “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”.

Lest there be any ambiguity, he expanded: “I am not asking for something that the government should not be doing. I am only saying you allow me to complete the negotiations. I agree to come to Parliament before I proceed to operationalise. What can be more reasonable than this?” He then added: “All that I want is the authority to proceed with the process of negotiations through all the stages… If Parliament feels you have done some wrong, so be it”.

Singh had repeatedly promised to take Parliament into confidence before formalizing the deal. For instance, way back on March 10, 2006, he said in the Lok Sabha: “There should be no reason for anyone to doubt that anything will be done at the back of Parliament, or that we will do anything which would hurt the interests of the country as a whole”.

But that is precisely what he did — sign the 123 Agreement behind Parliament’s back, to the extent that he skipped its traditional monsoon session, setting a precedent that could be detrimental to the future of Indian democracy. Now any future government can skip a session of Parliament — or two — besides turning its back on the solemn promises it made to the legislative body.

The contrast between Singh and President George W. Bush in the way they handled the deal could not have been starker. From the time he introduced a legislative-waiver bill in March 2006 to last week’s signing ceremony, Bush worked in a spirit of bipartisanship, forging an impressive political consensus at home.

The Hyde Act was the product of such consensus-building and political co-option, with the administration holding closed-door briefings for lawmakers and allowing its three-and-a-half-page bill to be expanded to a 41-page litany of India-specific conditions. Bipartisan support also was the key to the recent passage of the ratification legislation, the “US-India Nuclear Cooperation Approval and Non-Proliferation Enhancement Act”, which imposes Hyde Act-plus obligations on India.

After the Senate approved this Hyde Act-plus legislation on October 1, Bush said: “I commend the members of the Senate Foreign Relations Committee for their leadership in crafting this important bipartisan legislation”. The bipartisanship was on full display at the October 8 White House ceremony, when Bush signed that legislation into law in the presence of Democratic and Republican leaders.

By contrast, Singh’s approach was blatantly partisan, subordinating national interest to personal agenda. Although the deal has divided India like no other strategic issue since independence, Singh did not hold a single all-party meeting on the subject ever since he sprung the accord as a surprise on the nation in 2005. However, he was quick to hold more than one all-party meeting on the parallel summertime agitations that wracked Jammu and the Kashmir Valley.

In the long, tortuous process of deal-making, he went from one stage to the next by relying on a supine national media to help create a juggernaut of “inevitability”. At the same time, he meretriciously kept assuring the nation that he would build a broad political consensus.

Just two days after signing the agreement-in-principle on July 18, 2005, he said: “It goes without saying that we can move forward only on the basis of a broad national consensus”. On August 17, 2006, he told the Rajya Sabha: “Broad-based domestic consensus cutting across all sections in Parliament and outside will be necessary”. Subsequently, he reassured Parliament that he will “seek the broadest possible consensus within the country to enable the next steps to be taken”.

Instead of any attempt at consensus-building, the nation witnessed a polarizing single-mindedness. The zealous partisanship only helped undermine India’s negotiating leverage.

The upshot was the progressive US attachment of tougher conditions at every stage. That partly resulted from U.S. bipartisan efforts to make the deal more palatable to the non-proliferation constituency. But the gradual attachment of more and more conditions also flowed from the belief in Washington that a deal-desperate Singh would accept such a final product, especially if its mortifying terms were cosmetically couched.

The US was so right. Just as Singh’s government had blithely picked on Bush’s December 2006 Hyde Act signing statement to claim relief from that Act’s grating conditions, it has now cited Bush’s statement signing the Hyde Act-plus legislation into law to assert an illusory reprieve.

But Bush’s statement last week could not have been clearer in underpinning the primacy of US law: “The bill I sign today approves the 123 Agreement I submitted to Congress — and establishes the legal framework for that agreement to come into effect. The bill makes clear that our agreement with India is consistent with the Atomic Energy Act and other elements of US law”.

It also makes plain that New Delhi has only a theoretical right to reprocess spent fuel and that the actual right “will be brought into effect upon conclusion of arrangements and procedures”, to be negotiated in the years ahead. And to help Singh spin reality at home, Bush said the new legislation “does not change the fuel assurance” as “recorded in the 123 Agreement” — without citing either his earlier statement that such a commitment is political, not legally binding, or the new legislation’s fuel-restrictive provisions, including Section 102(b)(2) that mandates limiting supply to “reasonable reactor operating requirements” and Section 102(b)(1) that requires that if the US terminates cooperation with India, it will ensure New Delhi does not secure supplies from “any other source”.

Put simply, India has no legally binding fuel-supply assurance; no operational reprocessing right; no permission to build strategic fuel reserves; no entitlement to take corrective measures, whatever the circumstance; and no escape hatch from the legal obligations it is assuming. All the key assurances Singh made in Parliament on August 17, 2006, thus stand jettisoned. Yet today he celebrates a deal that cannot survive the light of parliamentary scrutiny and sets a treacherous legacy.

History has a way of catching up with the truth. As a well-known proverb goes, “The mills of God grind slowly, yet they grind exceeding small”.

U.S. Congress approves nuclear deal with India

Posted on October 2, 2008 by Chellaney

India saddled with a misbegotten deal

Brahma Chellaney

India Abroad, October 10, 2008

As illustrated by the Senate vote, the United States has pursued the civil nuclear deal with India through a strong bipartisan consensus at home. By contrast, the Indian Parliament has not only been sidelined — with the government skipping the traditional monsoon session — but also the deal is being thrust on the Indian nation in a blatantly partisan manner, making it a highly divisive issue.

With the Senate vote, the U.S. congressional ratification process is over, but the deal can be brought into force only after the U.S. President has fulfilled requirements specified in the ratification legislation titled, United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act (full text below, with significant sections highlighted in red).

Before exchanging diplomatic notes to bring the deal into effect, the President has to certify to Congress that “it is the policy of the United States to work with members of the Nuclear Suppliers Group (NSG), individually and collectively, to agree to further restrict the transfers of equipment and technology related to the enrichment of uranium and reprocessing of spent nuclear fuel” [Section 204a].

Contrast this with Prime Minister Manmohan Singh’s solemn assurance to Parliament about the “removal of restrictions on all aspects of cooperation and technology transfers pertaining to civil nuclear energy, ranging from nuclear fuel, nuclear reactors, to reprocessing spent fuel.” Lest there be any ambiguity regarding this benchmark, he added: “We will not agree to any dilution that would prevent us from securing the benefits of full civil nuclear cooperation as amplified above.” He had said: “The central imperative in our discussions with the United State on civil nuclear cooperation is to ensure the complete and irreversible removal of existing restrictions imposed on India through iniquitous restrictive trading regimes over the years.” In fact, the Prime Minister had even pledged in Parliament: “Before voluntarily placing our civilian facilities under IAEA safeguards, we will ensure all restrictions on India have been lifted.” That pledge he is set to break.

The United States has come full circle: Having initiated a penal approach against India following the 1974 test, the U.S. has now created a special exemption for India from the very rules Washington helped fashion to punish India.

For India, the proffered deal raises troubling questions. It does not come with basic elements that any recipient state would want.

India has no assured fuel-supply guarantee. The United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act reaffirms that the fuel-supply assurances in the 123 agreement are “political commitments,” not legal assurances, as the U.S. President himself has attested.

Moreover, Section 102(b)(2) of this Act mandates that “any nuclear power reactor fuel reserve provided to the Government of India for use in safeguarded civilian nuclear facilities should be commensurate with reasonable reactor operating requirements.”

It also states that “in the event that nuclear transfers to India are suspended or terminated pursuant to title I of such Act (22 U.S.C. 8001 et seq.), the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.), or any other United States law, it is the policy of the United States to seek to prevent the transfer to India of nuclear equipment, materials, or technology from other participating governments in the Nuclear Suppliers Group (NSG) or from any other source” [Section 102(b)(1)].

So, if the U.S. terminates cooperation with India, it will seek to ensure that New Delhi cannot secure supplies from “any other source.”

India has been granted no upfront reprocessing right, with the U.S. Congress empowering itself to carefully scrutinize any subsequent reprocessing-related arrangements with New Delhi. The title of Section 201 of the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act is self-explanatory: “Procedures Regarding A Subsequent Arrangement on Reprocessing.”

Not only has Congress asserted its right to reject any subsequent arrangements to grant India the right to reprocess spent fuel [Section 201(c)], but also demanded from the President “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” [Section 201(b)(1)(c)].

India has inexplicably agreed to negotiate a separate Section 131 agreement on reprocessing later — an accord that will need to pass congressional muster — although Washington granted Japan and EURATOM the actual right to reprocess upfront in a 123 agreement. For example, the 1987 Japan-U.S. 123 accord was accompanied by a nine-page “implementing agreement” that gave effect to “advance, long-term consent for reprocessing, transfers, alteration and storage of nuclear material” by spelling out the reprocessing-related arrangements.

In fact, New Delhi has gratuitously agreed to route all “foreign nuclear material” through a new reprocessing facility. Now, the U.S. Congress is seeking to ensure that other supplier-states like France and Russia do not grant India a reprocessing right on terms less stringent than the U.S.

The ratification legislation strips the sanctity of the bilateral 123 Agreement by making it completely subservient to U.S. law. As the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act puts it: “Nothing in the Agreement shall be construed to supersede the legal requirements of the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 or the Atomic Energy Act of 1954” [Section 102(d)]. In all fairness, it must be admitted that the United States for decades has held the position that a 123 agreement with any state is neither a treaty nor has force under the Vienna Convention on the Law of Treaties (which the U.S. hasn’t even ratified). After all, a 123 agreement is a requirement not under international law but under U.S. law.

In any event, the 123 agreement India has negotiated with the U.S. grants Washington an unfettered right to suspend all supplies forthwith. The 123 agreement only demands the serving of a one-year termination notice on any ground, however extraneous. Suspension of supplies can follow immediately. For the U.S., such an unconstrained right was vital to tether New Delhi to the eclectic non-proliferation conditions the deal imposes.

The deal on offer creates a Tarapur-style trap of gigantic dimensions. In fact, the latest United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act specifically empowers the U.S. to do what it did in 1978 — retroactively rewrite the rules of cooperation with India by enacting a new domestic law. Section 101(b) affirms that the agreement with India shall be subject not only to the Hyde Act and the Atomic Energy Act but also to “any other applicable United States law.”

The notion that India can build energy “security” through imports of high-priced, foreign fuel-dependent reactors is an absurdity.

The current electricity-market liberalization trends spell trouble for the global nuclear-power industry because they threaten the state support on which it survives. As a 2005 International Atomic Energy Agency study by Ferenc Toth and Hans-Holger Rogner warns, “nuclear power’s market share might indeed follow a downward trajectory” if state subsidies abate and more cost-effective reactors are not designed.

Nuclear power reactors also remain very capital-intensive, with high up-front capital costs, long lead times for construction and commissioning, and drawn-out amortization periods that discourage private investors.

Three factors are likely to discourage private investment in Indian nuclear power. The first is the deal’s messy terms. The second is the political uncertainty in India, where national elections are approaching. The commercial deals will take long to finalize, but several parties have vowed to review or renegotiate the deal if voted to power.

Yet another factor is the continuing disarray that marks the Indian electricity market and energy policy. The nuclear-power industry in India is state run and subsists on generous government subsidies. But even the subsidized price of nuclear electricity is higher than the cost from most other energy sources. It is not clear to what extent the next Indian government will be able to guarantee similar subsidies or provide full accident-liability and regulatory-delay cover to encourage private investment at a time when the country is trying to promote electricity-market liberalization. In fact, to allow private players in the nuclear-power industry, India will have to amend its Atomic Energy Act in a process that would subject the deal finally to some parliamentary scrutiny, even if belatedly.

Playing Injured Innocence on Nuke Deal

Posted on September 21, 2008 by Chellaney

Blunder, then blame the United States

There is nothing new in the latest U.S. statements on key nuclear deal-related issues — from fuel-supply and reprocessing conditions to denial of dual-use technologies and assertion of a unilateral right to suspend cooperation forthwith. Yet, New Delhi now is unfairly accusing Washington of reinterpreting the terms.

Brahma Chellaney

Asian Age, September 22, 2008

The nuclear deal now on offer creates a Tarapur-style trap of gargantuan dimensions. The deal’s terms are far worse than the agreement under which the U.S.-built Tarapur nuclear power station was set up in the 1960s. Yet, New Delhi is entering into a new deal without resolving the long-festering Tarapur imbroglio, symbolized by the spent fuel that has been accumulating there for 37 years, with the U.S. asserting a veto on Indian reprocessing and refusing to grant consent.

Disputes over the latest deal are flaring up even before it has been legalized, with New Delhi starting the blame game in earnest. Through its pet stooges in the media, it has accused Washington in recent days of “unilaterally altering the ground rules”, of “repudiating fuel-supply assurances”, of “introducing a dangerous new interpretation” on reprocessing, and of “robbing the deal of its essence”.

Playing injured innocence, however, just doesn’t wash. The fact is that while Washington has been consistent, candid and hard-nosed on the deal since 2005, New Delhi played a game of public deception all along, hoping its charade would not be uncovered. But now that it has run out of covers to cloak its ever-widening field of distortions, blaming America has become easy.

The revelations that spring from President George W. Bush’s latest “Hyde Package” to Congress and his administration’s leaked letter to a congressional panel are entirely consistent with earlier U.S. official statements as well as with the provisions of the Hyde Act and the 123 agreement. There is nothing new. Yet, the U.S. today is being accused of seeking to rewrite or reinterpret the deal’s terms. Consider the following:

● The U.S. gave no guarantee of reactor-lifetime fuel supply or to help India build a strategic fuel reserve. Bush’s recent statement that American fuel-supply assurances are “not legally binding” is no different than past assertions by other U.S. officials. For instance, then U.S. Undersecretary Nicholas Burns clarified in July 2007 that none of the U.S. fuel assurances in the 123 accord “contradicts or conflicts with the legal right of any American President” to terminate supply and demand the return of supplied materials if India breached the U.S.-prescribed conditions.

The 123 agreement, significantly, makes no mention of the term, “lifetime”. It offers assured fuel supply only so long as India adheres to the stipulated conditions. Supply assurance, as the Hyde Act decrees, can cover only disruption due to market failure or technical problems, but not sanctions arising from India’s non-compliance. Burns, asked in an August 2, 2007 interview if America was committed to arranging alternative fuel supply if India tested, replied: “That’s absolutely false”. The Hyde Act indeed demands that India be prevented from building any fuel stockpile of a size that would permit its “riding out any sanctions that might be imposed” by the U.S. in the future.

● Bush’s assertions on no upfront or permanent reprocessing consent to India are in line with what his officials said earlier. Nicholas Burns, for instance, announced the following at a July 27, 2007 news conference: one, there is no timeframe within which the U.S. intends to grant India an operational consent to reprocess; and two, India has first to build a new “state-of-the-art” reprocessing facility to U.S. satisfaction before special “arrangements and procedures” for reprocessing can be worked out.

India inexplicably agreed to negotiate a separate Section 131 agreement on reprocessing later — an accord that will need to pass congressional muster — although Washington granted Japan and EURATOM the actual right to reprocess upfront in a 123 agreement. For example, the 1987 Japan-U.S. 123 accord was accompanied by a nine-page “implementing agreement” that gave effect to “advance, long-term consent for reprocessing, transfers, alteration and storage of nuclear material” by spelling out the reprocessing-related arrangements.

In fact, New Delhi has gratuitously agreed to route all “foreign nuclear material” through a new reprocessing facility. As a result, even France is unwilling to grant India reprocessing right upfront at this stage.

● The recent U.S. disclosure that India has agreed to inspections beyond those by the International Atomic Energy Agency is consistent with the Hyde Act’s stipulation for “fall-back U.S. safeguards” and with the 123 agreement’s Article 10(4). The revelation shatters the Prime Minister’s assurance to Parliament that “we will accept only IAEA safeguards” and that “there is no question of accepting other verification measures or … allowing American inspectors to roam around our nuclear facilities”.

● The U.S. publicized intent to deny India sensitive and other dual-use technologies even under safeguards is no surprise. Washington had made it clear by 2006 that, despite originally committing to “full civil nuclear trade with India”, its cooperation in practice would be less than full. The U.S. indeed concluded a 123 accord with India more restrictive than its existing cooperation agreements with Australia, Japan and South Korea.

Piteously, India will not able to import any components for the special reprocessing facility it has agreed to build to U.S. expectations, because its negotiators failed to persuade America to relax civil reprocessing, enrichment and heavy-water sanctions.

The Prime Minister had pledged in Parliament: “Before voluntarily placing our civilian facilities under IAEA safeguards, we will ensure all restrictions on India have been lifted”. That pledge he is set to break.

● The recent U.S. affirmation of an unfettered right to suspend all supplies forthwith meshes with the 123 agreement’s provisions. That accord only demands the serving of a one-year termination notice on any ground, however extraneous. Suspension of supplies can follow immediately.

For the U.S., such an unconstrained right was vital to tether New Delhi to the Hyde Act, an India-specific NPT. In congressional testimony last Thursday, the Bush administration again affirmed that “whether it’s a test or an abrogation of a safeguards agreement, our actions will be bound by U.S. law”. Latest U.S. statements on testing (such as, “the Indian government intends to uphold the continuation of the test moratorium”) suggest that New Delhi has given its word to Washington never to test again.

Once the deal takes effect, the Hyde Act’s post-implementation conditions will also kick in — from an annual presidential certification of Indian good behaviour to pressing India’s “full compliance” with a non-nuclear, U.S.-led cartel like the Missile Technology Control Regime.

Against this background, can the U.S. be accused of leading up the garden path an India that was beseeching to be taken into a blind alley? Shouldn’t New Delhi, in all fairness, acknowledge Washington’s long-held position that a 123 agreement with any state is neither a treaty nor has force under the Vienna Convention on the Law of Treaties (which the U.S. hasn’t even ratified)?

Many of the accusations now being hurled by surrogacy are actually part of a public-relations exercise by New Delhi to dissuade the congressional attachment of more conditions during the ongoing ratification process. Despite threats to turn its back on the U.S. and do business only with France and Russia, New Delhi will dare not displease Washington. Continued cooperation under the deal hinges on India meeting its panoply of non-proliferation commitments that extend far beyond a test moratorium. The U.S. could make life difficult for India at any time through an unfavourable assessment of its progress in meeting those commitments.

Messy terms of U.S.-India nuclear deal to discourage private investors

Posted on September 18, 2008 by Chellaney

Hope overwhelms reality on U.S.-India nuclear deal

By BRAHMA CHELLANEY

The Japan Times, September 17, 2008

The controversy that has dogged the vaunted U.S.-Indian civil nuclear deal is unlikely to dissipate anytime soon despite the recent rule change by the Nuclear Suppliers’ Group. Deep-seated partisan rancor in India over the deal and the still-needed U.S. congressional ratification will ensure that. But more than commercial nuclear power, it is U.S. arms exports and closer strategic ties with India that the deal is likely to promote.

From the time it was unveiled more than three years ago as an agreement-in-principle, the deal has been anchored in broader strategic objectives — from intelligence sharing and building of interoperability between U.S. and Indian forces, to roping in India as a key player both in the "Global Democracy Initiative" and a disaster-response initiative with military orientation. India has agreed to fully support American nonproliferation initiatives and consider participating in U.S.-led "multinational operations."

As a thank you for the role U.S. President George W. Bush and Secretary of State Condoleezza Rice personally played in getting the suppliers’ group to exempt India from its rules, Prime Minister Manmohan Singh is expected to shortly sign three agreements that U.S. officials say are crucial to forge closer bilateral military ties. One is a logistic support accord, another is to provide for end-use monitoring of transferred weapons systems, and the third is to promote military-communications interoperability.

In addition to the orders it has placed recently for American maritime reconnaissance aircraft and military transport planes, India is gearing up to buy other American weapons systems. If Congress ratifies the nuclear deal, America is likely to clinch the contract — amid intense competition involving several countries — to sell India 126 fighter-jets for $10 billion. In this contest, Lockheed Martin has pitched its F-16 against Boeing’s F/A-18E/F Super Hornet.

As a recently leaked Bush administration letter to Congress states, the deal will also help revive the U.S. nuclear-power industry through exports and "access to Indian nuclear infrastructure," allowing "U.S. companies to build reactors more competitively here and in the rest of the world — not just in India."

With its acute shortage of nuclear engineers, the U.S. intends to tap India’s vast technical manpower. The hype over the deal, however, needs to be tempered by certain realities. India’s growing geopolitical weight, high economic- growth rate, abundant market opportunities and status as a key "swing state" in the emerging international order have helped increase its profile in U.S. policy. But too much is made of America’s desire to use India to hold China in check.

First, a durable U.S.-India partnership cannot be built on strategic opportunism in relation to a third country but rather on shared national interests.

Shared interests mean far more than shared democratic values, which in practice can look very different. For instance, it is a tribute to the vitality of U.S. democracy that Congress is to closely scrutinize the nuclear deal again, after having passed an India-specific legislative waiver — the 2006 Hyde Act. This means Congress will have a second look at the deal.

In contrast, the Indian Parliament has had little role to play in the deal, although its conditions bring India within the constraints of the U.S.-led nonproliferation regime, impinging on the long-term credibility of the country’s nuclear deterrent. New Delhi has agreed to put more than two dozen of its existing nuclear facilities and all its future civilian reactors under permanent, invasive and legally irrevocable international inspections — the kind that only nonnuclear-weapons states accept.

In addition, it has agreed to shut down by 2010 the newly refurbished Cirus research reactor — the supplier of plutonium for India’s 1974 test and now the source of 30 percent of the country’s weapons-grade plutonium production.

Second, it appears unlikely that India will allow itself to be used as a foil against an increasingly assertive China, lest Beijing step up its direct and surrogate military pressures.

In the coming years, India will increasingly be aligned with the West economically. But strategically it can avail itself of multiple options, even as it moves from nonalignment to a contemporary, globalized practicality. In keeping with its long-standing preference for policy independence, India is likely to retain the option to forge different partnerships with varied players to pursue a variety of interests in diverse settings.

That means that from being nonaligned, India is likely to become multi-aligned. Also, even with the deal, nuclear power will continue to play a modest role in India’s energy mix. With the proposed import of eight 1,000-megawatt reactors within the next four years, the share of nuclear power in India’s electricity generation is unlikely to rise above the current 2.5 percent.

Not only is the share of other energy sources rising faster in India, but the first of the new imported power reactors — because of the long lead time required for construction and commissioning — won’t start producing electricity until almost a decade from now. The notion that India can build energy "security" through imports of high-priced, foreign fuel-dependent reactors is an absurdity.

Moreover, just as cheap oil now appears fanciful, cheap nuclear power has long been a mirage. More than half a century after then U.S. Atomic Energy Agency Chairman Lewis Strauss claimed that nuclear energy would become "too cheap to meter," the nuclear power industry everywhere subsists on generous state subsidies.

The current electricity-market liberalization trends spell trouble for the global nuclear-power industry because they threaten the state support on which it survives. As a 2005 International Atomic Energy Agency study by Ferenc Toth and Hans-Holger Rogner warns, "nuclear power’s market share might indeed follow a downward trajectory" if state subsidies abate and more cost-effective reactors are not designed.

The first is the deal’s messy terms. To allay deep-seated nonproliferation concerns and build bipartisan support in Congress and consensus in the suppliers’ group, the U.S. legislative and multilateral waivers for cooperation with nuclear-armed India have come with an array of conditions, some explicit, some implicit. Making matters worse, some issues have not been fully clarified but left hanging to allow the beleaguered Indian government to save face at home.

The second is political uncertainty in India, where national elections are approaching. Several parties have vowed to review or renegotiate the deal if voted into power. Having lost one state election after another in recent years, the ruling Congress Party’s prospects of returning to office are not bright.

If the U.S. Congress is unable to ratify the deal in a rushed process this month, the matter will be left to the next administration in Washington, with a new Indian government possibly seeking to reopen the terms.

It is not clear to what extent the next Indian government will be able to guarantee similar subsidies or provide full accident-liability and regulatory-delay cover to encourage private investment at a time when the country is trying to promote electricity-market liberalization. In fact, to allow private players in the nuclear-power industry, India will have to amend its Atomic Energy Act in a process that would subject the deal finally to parliamentary scrutiny, even if belatedly.

Brahma Chellaney, a professor of strategic studies at the privately funded Center for Policy Research in New Delhi, is the author, among others, of "Nuclear Proliferation: The U.S.-India Conflict."

The Japan Times: Wednesday, Sept. 17, 2008

A slew of distortions over the U.S.-India nuclear deal

Posted on September 17, 2008 by Chellaney

Stretching The Truth

The Hindustan Times, September 18, 2008

Phoney claims are being repeated to mould public perceptions on the India-U.S. civilian nuclear deal, writes Brahma Chellaney.

As if the corrosion of its state institutions was not enough, India is being pummelled by an officially scripted onslaught of half-truths and outright deception over the vaunted Indo-U.S. nuclear deal. Phoney claims are being repeated even after they stand publicly discredited by President George W. Bush’s latest ‘Hyde Package’ to Congress and his administration’s earlier leaked letter to a congressional panel. It is as if truth no longer matters.

Can the obsessive deal-peddling take precedence over everything? Has no thought been given to the lasting damage that an unabashedly partisan approach relying on politicized bureaucrats and spin doctors would wreak? If the refusal to hold the traditional monsoon session of Parliament is unprecedented — setting a precedent toxic for the future of democracy — no less ominous is the deliberate spread of a slew of distortions to push the deal-making, without the consensus-building Prime Minister Manmohan Singh had promised. Making false claims without any qualms, especially to cover up broken promises to Parliament, is no mean matter.

The U.S. says loudly the deal is fully governable by its Hyde Act, an India-specific NPT. But New Delhi still markets the loosely worded 123 agreement as the only binding document — an accord that actually arms the U.S. with a unilateral right to suspend cooperation “immediately”. Bush publicly asserts that the 123 agreement’s fuzzy fuel-supply assurances do not “transform these political commitments into legally binding commitments”. Recipient India responds by trying to give international-law lessons to supplier America.

The leaked letter embarrassingly discloses that “the Indian government shares our understanding” that fuel-supply assurances are not “meant to insulate India against the consequences of a nuclear-explosive test or a violation of non-proliferation commitments”. The letter derides as “a high level of generality” the PM’s claim in Parliament about a linkage between “lifetime” fuel supply and perpetual international inspections.

The PM tells Parliament India has “secured upfront” a “permanent consent” to reprocess spent fuel. Bush publicly contradicts him by saying this right “will not come into effect until India establishes a new national reprocessing facility” and agrees to special “arrangements and procedures” with the U.S. in the years ahead. And Bush’s ‘Nuclear Proliferation Assessment Statement’ attests that the reprocessing consent, once granted, can be withdrawn. However inadvertently, Washington has helped bust several other Indian claims, including that New Delhi has accepted inspections only by the International Atomic Energy Agency.

Yet, deal-aggrandizing distortions continue to swirl at such a pace that they get picked up and recycled as facts by a pliable media before anyone can controvert them. Flogging fabrications indeed has proven so useful in shaping public perceptions that claims are becoming more brazen. Take the claim that the deal marks the end of the technology-control regime against India.

Easing high-technology and civilian-space export controls is not even part of this deal. What the deal seeks to open are lucrative exports for “IAEA-safeguarded” Indian facilities while specifically denying dual-use technologies. In return for being allowed to import commercial power reactors and fuel under tight safeguards, India has been made to accept conditions that no nuclear-weapons state will countenance.

Bush’s ‘Hyde Package’ makes clear the U.S. has no intent to allow any sensitive transfers, including of civil enrichment and reprocessing technology. The Nuclear Suppliers’ Group waiver, similarly, is based on an understanding not to export sensitive items to India. This understanding, reflected in the various national statements, part of the negotiating record, should be seen against the Hyde Act’s open call to “further restrict the transfers of such equipment and technologies”.

Indeed, Section 3(a) of the NSG waiver explicitly ties exports to India to the NSG Guidelines’ Paragraphs 6 and 7, which incorporate a presumption of denial of sensitive items. This restriction is reinforced by the Guidelines’ Part 2, Paragraph 4. With the NSG nearing consensus to impose an overt ban on sensitive sales to a non-NPT state like India, what is now implicit will become explicit. As for dual-use technologies, the NSG Guidelines already annex an exhaustive list of such items barred for export.

Contrast this with the PM’s July 22 contention in Parliament that the deal frees “trade in dual-use high technologies” and his September 6 claim that the NSG waiver “marks the end … of the technology-denial regime”. All technology controls against India ought to go. But even after the deal takes effect, India will still face barriers to high-technology flow, including the U.S. Commerce Department’s dual-use export controls. The U.S. Congress, for instance, has cross-linked civil nuclear cooperation to the continuance of U.S. export controls against New Delhi in an unrelated area, with the Hyde Act stipulating that U.S. missile sanctions law (which prohibits dual-use space exports) will still apply to India even after it “unilaterally adheres” (as it quietly did last week) to the Missile Technology Control Regime.

If high-technology and civilian-space trade is to be opened fully, it will require New Delhi to do more than pull the wool on public eyes at home — persuade Washington to apply to India the same standard it does to another non-NPT state, Israel. The partisan rancour springing from the deal’s political mismanagement has done India a great disservice. The truth-stretching threatens to do worse.

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

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