To handle China, be a bit Chinese

Posted on July 31, 2008 by Chellaney

Beat them at their own game

Brahma Chellaney

Hindustan Times, July 30, 2008

As an extension of the truisms of politics, like sunny beats gloomy, Beijing has devised its own positive slogans that its diplomats love to recite, such as a “win-win situation” and “common goals”. Such sloganeering provides diplomatic cover for the assertive promotion of Chinese interests. India needs to similarly strike an upbeat note and emphasize positives like “constructive engagement” and “shared benefits”. And through such catchphrases, New Delhi ought to publicly encourage Beijing to have a more “forward-looking approach” and shed the current negatives in its approach.

For example, China’s harking back to the past — to the unfinished business of 1962 — by laying claim to additional Indian territories runs counter to the constructive spirit essential to a win-win situation. Its pressing of increasingly assertive territorial claims on the basis of Tibet’s putative historical ties to those areas shows a mindset anchored in the past. That is a loss-loss situation, not a win-win situation. Similarly, China’s reluctance, while stepping up cross-border intrusions, to define the frontline with India by hiding behind shibboleths like, “It’s a problem left over from history” and “We need time and patience”, needs to be openly challenged as unconstructive, uncooperative and downright negative, with the intent to keep India under pressure.

India’s use of positives to bring out China’s negatives has become imperative in view of the rising Chinese belligerence, manifest from the proliferation of incursions and other border-related incidents since 2006 along a once-tranquil line of actual control (LAC). Even Defence Minister A. K. Antony was constrained to admit on July 23 that India is “concerned” over the increasing frequency of Chinese incursions. “We don’t take these things lightly”, he said. Such military incidents are proof that China’s negatives do not sit well with its claims.

Beijing, not content that Han territorial power is at its pinnacle, still seeks a Greater China. With 60 per cent of its present landmass comprising homelands of ethnic minorities, modern China has come a long way in history since the time the Great Wall represented the Han empire’s outer security perimeter. Yet, driven by self-cultivated myths, the state fuels territorial nationalism, centred on issues like Tibet and Taiwan, and its claims in the East and South China Seas and on Arunachal Pradesh — a state nearly thrice the size of Taiwan. China’s insistence on further expanding its national frontiers stymies a forward-thinking approach essential to building peace and stability in Asia.

The challenge China poses emanates principally from the character of its regime, not of its people. After all, weapons don’t kill until those holding the reins of power employ them. The military machine has been repeatedly unleashed against China’s own residents. The Chinese regime fans ultra-nationalism because the central tenet of its philosophy is uniformity, with Hu Jintao’s slogan of a “harmonious society” designed to undergird the theme of conformity with the state. While India celebrates diversity, China honours homogeneity. This quality of being uniform is implanted not just in institutions but also in popular thought.

Building consensus in democratic states entails reaching out to political opponents. In China, consensus is contrived simply through censorship, which snuffs out dissent. To stay healthy and to improve, a society needs an open, vigorous debate of its failings. But when a regime blocks such discussion, it can mean trouble for its inhabitants (as the latest repression in Tibet shows) and for its neighbours (as underlined by Beijing’s increasingly muscular foreign policy). The greatest genocide in modern history was not the Holocaust but Mao’s so-called Great Leap Forward.

That record, coupled with the counterproductive approach toward Tibet and India, belies the myth that Chinese rulers are pragmatic and farsighted. Indeed, the record shows them as proverbial extremists, lurching from one end of the pendulum (hardcore communists) to the other extreme (unabashed capitalists). Whom they denounced as China’s enemies in the past are the very nations they zealously befriend today. They pursued policies previously that had no regard for human costs. Today, they pursue policies with little respect for the environment.

The secretive, suspicious and paternalistic culture in which Chinese leaders have been reared is reflected in their shadowy and shifty policy toward India. To tackle a regime wedded to nationalism as state religion and opacity as strategy, New Delhi needs greater clarity and resolve on the ends and means of its China policy. In fact, to outwit this regime at its own game, New Delhi should be willing to employ some of the Chinese tactics and tools. In order words, to handle China, emulate the Chinese.

While publicly speaking the language of conciliation, New Delhi has to brace up to the prospect that once the Olympics are over, Beijing may be tempted to provoke more military incidents, especially if India’s domestic politics remain murky and policy in disarray. A full-scale war will militate against the regime’s portrayal of China as a peaceful rising power. But can anyone discount the possibility that it may seek to achieve limited strategic objectives through short, swift, localized forays across a couple of points along the LAC that give India a bloody nose? A lightening Chinese military expedition may be designed to cut a peer rival down to size in the eyes of the world and help end the now-fashionable China-India pairing the regime viscerally detests.

Growing Chinese assertiveness against India

Posted on July 22, 2008 by Chellaney

China’s next India war

Brahma Chellaney

Covert magazine, July 16-31, 2008

China’s rapidly accumulating power is emboldening Beijing to pursue a more muscular foreign policy. After having touted its “peaceful rise”, it has shown a creeping propensity to flex its muscles — a tendency that has become more pronounced since it surprised the world with an anti-satellite weapon test in January 2007. Once the Beijing Olympics are over, it may not be long before China takes its gloves off. In fact, over the past year, its actions have ranged from provocatively seeking to assert its jurisdiction over islets claimed by Vietnam and staging large-scale war games in the South and East China Seas, to showcasing its new nuclear submarine capability and whipping up diplomatic spats with countries that grant official hospitality to the Dalai Lama.

What stands out the most is the perceptible hardening of China’s stance towards India. This is manifest from the Chinese military assertiveness on the ground (reflected in rising cross-border incursions), the supply of Chinese arms to rebels in India’s northeast, the instigation of the Gorkhaland agitation via Nepal connections, and the waging of intermittent cyberwarfare by targeting official Indian Web sites. From Chinese forces in November 2007 destroying some makeshift Indian army bunkers near Doka La, at the Sikkim-Bhutan-Tibet trijunction, to the Chinese foreign minister’s May 2007 message that Beijing no longer was bound by a 2005 agreement that any border-related settlement should not disturb settled populations, bellicosity has been writ large.

Recent unfriendly actions include the post-midnight summoning of the Indian ambassador in Beijing, slighting visiting External Affairs Minister Pranab Mukherjee by cancelling his scheduled meeting with Premier Wen Jiabao, and deputing a junior functionary to receive earthquake-related relief from Mukherjee. These and other actions run counter to the stated aim of the high-level visits between the two countries to build a stable Sino-Indian relationship based on equilibrium and forward thinking. The public statements coming out from such visits, of course, are deceptively all sweetness and light.

The big question is: What objectives is China seeking to achieve by hardening its position? Indeed, it has gone to the extent of warning India of another 1962-style invasion through one of its state-run institutes. In a recent Mandarin-language commentary posted on the Web site of the International Institute of Strategic Studies of China, http://www.chinaiiss.org/, the author, using an assumed name, cautioned an “arrogant India” not “to be evil” or else Chinese forces in war “will not pull back 30 kilometres” like in 1962. Such belligerence, which has led to more than three dozen Chinese military forays into Sikkim alone this year, has prompted India to redeploy forces by beefing up defences in the vulnerable Siliguri Corridor, stationing Sukhoi-30s in Tezpur and initiating moves to reactivate seven abandoned airstrips along the Himalayas.

China’s motives remain a puzzle. Yet there are several disturbing parallels between what is happening now and the events between 1959 and 1962 that led to the Chinese invasion. That aggression had been cleverly timed to coincide with the Cuban missile crisis, which brought the United States and the Soviet Union to the brink of a nuclear Armageddon. Consider the following parallels:

■ Like in the pre-war period, it has now again become commonplace internationally to speak of India and China in the same breadth. The aim of “Mao’s India war” in 1962, as Harvard professor Roderick MacFarquhar has called it, was mainly political: to cut India to size by demolishing what it represented — a pluralistic, democratic model to China’s totalitarian political system. As Premier Zhou Enlai publicly admitted then, the war was intended “to teach India a lesson”. The swiftness and force with which Mao Zedong managed to teach India a lesson not only discredited the Indian model in the eyes of the world, but boosted China’s international image and consolidated the Chinese strongman’s internal power to the extent that he could go from his disastrous 1957-61 Great Leap Forward — the greatest genocide in modern history, surpassing even the Holocaust — to wreaking more damage in the name of the Cultural Revolution.

It has taken India more than 45 years to again be paired with China — a comparison Beijing viscerally loathes.

■ In the Mao years, China instigated and armed major insurgencies in India’s northeast. That included the Naga rebels, with the China-trained Thuingaleng Muivah still the military chief of the National Socialist Council of Nagaland (Isak-Muivah faction); the Mizo guerrilla movement whose leader Laldenga was openly embraced by Chinese leaders; and Manipur’s so-called People’s Liberation Army. Such assistance ceased after Mao’s death. But today, China may be coming full circle, with Chinese-made arms increasingly flowing into guerrilla ranks in the northeast. Although an 11-year-old ceasefire between Naga militants and New Delhi has brought peace to Nagaland, several other parts of the northeast are today wracked by insurgencies, allowing Beijing to fish in troubled waters.

■ Like in the period up to 1962, there is a mismatch today between Indian talk and capability, offering a potential incentive to China to try and put India in its place. India’s power pretensions today are such that it believes it can punch above its weight. Yet the gaps in its defences make the parallel with the pre-1962 period glaring.

More than a decade after it went overtly nuclear, the country still lacks a barely minimal deterrent against China. To have peace with China, India needs to be able to defend peace. The advantages China has over India in military infrastructure and logistics, size of conventional forces and being on the upper heights can be neutralized only through an effective nuclear-missile capability. But India has still to deploy its first Beijing-reachable missile. Three decades after China tested its first intercontinental ballistic missile, India doesn’t have an ICBM programme even in the pipeline, although it is spending a staggering $3.4 billion on a lunar project bereft of security benefits. While Jawaharlal Nehru made the mistake of chasing romantic goals, the present prime minister has consciously chosen deal-making over deterrent-building.

■ Mirroring the confusion in New Delhi’s Beijing policy from the mid-1950s to 1962, India today lacks clarity on the ends and means of its strategy vis-à-vis China. Just as there was a propensity in the pre-war period to take Chinese statements at face value and condone furtive Chinese moves, including the nibbling at Indian territory, the Indian establishment today willingly makes allowances for China’s assertiveness. Nothing better illustrates this than army chief Gen. Deepak Kapoor’s public assertion that India is as culpable as China in committing cross-border intrusions. His shocking statement not only made light of the increasing number of Chinese incursions, but also implicitly condoned China’s calculated refusal to clarify the frontline. To say the “Chinese have a different perception” of the frontline, as he did, is to disregard the fact that it suits China not to clarify the line of control and keep India under military pressure.

Such wanton indulgence — reminiscent of India’s pre-war miscalculations — can only embolden China to step up intrusions. In another reminder of that era, New Delhi first sought to sweep under the rug the November 2007 Chinese military action near Doka La, only to sheepishly admit the truth four months later, with Pranab Mukherjee telling Parliament last March that although Beijing accepts the Sikkim-Tibet border “as settled in the Anglo-Sikkim Convention of 1890”, “some bunkers have been destroyed and some activities have taken place”.

■ Just as India retreated to a defensive position in the border negotiations with Beijing at the beginning of the 1960s after having undermined its leverage through its formal acceptance of the “Tibet region of China”, New Delhi today has drawn back to an untenable negotiating position. Instead of gently shining the spotlight on the core issue of Tibet and China’s continuing occupation of Aksai Chin, India is willing to discuss the newly assertive Chinese claim on Tawang. By contrast, Beijing sticks to its tested old line that what it occupies is Chinese territory and what it claims is also Chinese territory. So what it claims has to on the negotiating table — a cynical stance India meekly countenances.

As a consequence, the wounds of that 32-day war have been kept open by China’s claims to additional Indian areas even as it holds on to the territorial gains of that conflict.

The reality is that the trans-Himalayan military equations have been significantly changed by China’s July 2006 opening of the new railway to Lhasa. The railway, which is now being extended southward to Xigatse and then beyond to Nepal and to two separate points along the Indian border, arms Beijing with a rapid military deployment capability. It may not be a coincidence that China’s growing hardline approach has followed its infrastructure advances on the vast but sparsely populated Tibetan plateau, including the building of the railway and new airfields and highways. It is now constructing the world’s highest airport at Ngari, on the southwestern edge of Tibet.

India can expect little respite from the direct and surrogate pressure China is mounting. Through Burma, Bangladesh and Nepal, it will seek to destabilize the northeast. It will continue to prop up Pakistan militarily to help keep India boxed in on the subcontinent. In fact, it is now seeking to do a Burma in Sri Lanka by emerging as a key arms supplier to Colombo and building a billion-dollar port at Hambantota. More broadly, China has aggressively pursued port-related projects in the Indian Ocean rim countries. The symbols of such Chinese activity include Hambantota, Chittagong and Gwadar, now being expanded into a deepwater naval base.

China’s ravenous pursuit of resources, including in India’s periphery, is another factor New Delhi cannot ignore. Constraints on resources are likely to become pronounced as more and more Indians and Chinese gain income to embrace modern comforts. The global demand for resources is set to soar, along with their prices. Beijing’s energy-import needs have come handy to expand Chinese maritime presence along vital sea-lanes.

An imperial energy age indeed appears to be dawning as a result of China’s aggressive resources-related diplomacy. Consider the following developments:

● The emergence of a 21st-century, energy-related Great Game, with China outmanoeuvring India. Beijing has used its rising energy imports as justification for openly advancing military objectives. While conserving its own oil-and-gas reserves, it has stepped up imports — a strategy it is also pursuing on key minerals. For example, it has more iron-ore reserves than India, yet 52 per cent of Indian exports to China now consist of just one item — iron ore.

● Determined efforts to assert control over energy supplies and transport routes, including mercantilist moves to lock up long-term supplies. Such is China’s emphasis on legal ownership that it has been buying energy assets in faraway lands often at inflated prices.

The popular perception is that Chinese and Indian energy companies are engaged in fierce bidding wars to acquire overseas assets. But the cash-rich Chinese companies have easily beaten Indian competition everywhere. The only exception was the Akpo deepwater oil field in Nigeria, where India’s ONGC won the right to buy South Atlantic Petroleum’s 45 per cent stake. The irony, however, is that New Delhi blocked ONGC from picking up that stake on grounds that the $2-billion investment entailed unacceptable risks as the Nigerian majority stakeholder was a dubious, politically manipulated shell company. But no sooner had ONGC backed out from the deal than the state-run China National Offshore Oil Corp. (CNOOC) Ltd., China’s largest offshore oil producer, signed an accord on January 9, 2006, to pay $2.27 billion for the same 45 per cent stake.

● China is actively pursuing access-gaining projects along the major trade arteries in the Indian Ocean rim. Consequently, it is beginning to position itself along the sea-lanes from the Persian Gulf to the South China Sea.

With an increasingly assertive China to the north, a China-allied Pakistan on the west, a Chinese-influenced Burma to the east, and growing Chinese naval interest in the Indian Ocean, India has to foil its strategic encirclement. India’s energy-security interests, in fact, demand that its navy play a greater role in the Indian Ocean, a crucial international passageway for oil deliveries. In addition to safeguarding the sea-lanes, the navy has to protect the country’s large energy infrastructure of onshore and offshore oil and gas wells, liquefied natural gas terminals, refineries, pipeline grids and oil-exploration work within the vast Exclusive Economic Zone (EEZ).

● The establishment of interstate energy corridors (which also double up as strategic corridors) through the planned construction of pipelines to transport oil or gas sourced from third countries. China is busily fashioning two such corridors on either side of India through which it would transfer Gulf and African oil for its consumption, reducing its reliance on U.S.-policed shipping lanes through the Malacca and Taiwan Straits and also cutting freight costs and supply time in the process.

One corridor extends northwards from the Chinese-built Pakistani port of Gwadar, which represents China’s first strategic foothold in the Arabian Sea. Located at the entrance to the Strait of Hormuz, Gwadar is to link up with the Trans-Karakoram Strategic Corridor to western China.

The second is the Irrawaddy Corridor designed to connect Chinese-aided Burmese ports with China’s Yunnan, Sichuan and Chongqing provinces through road, river, rail and energy links.

● Strategic plans to assemble a “string of pearls” in the form of listening posts and special naval-access arrangements along the Indian Ocean sea-lanes. With its new blue-water navy and access arrangements around peninsula India, China is threatening to turn the Indian Ocean into the Chinese Ocean one day. As navy chief Adm. Suresh Mehta said in a speech last January, “Each pearl in the string is a link in the chain of Chinese maritime presence”. That presence is now being extended all the way to Mauritius, where China is opening a trade development zone at a cost of some $730 million, making it the largest foreign direct investment in that island-nation.

Add to this picture another resource issue, the one with the greatest strategic bearing on the long-term interests of India and China — water. Although India’s usable arable land is larger than China’s — 160.5 million hectares compared to 137.1 million hectares — the source of all the major Indian rivers except the Ganges is the Chinese-held Tibetan plateau. But even the two main tributaries of the Ganges flow in from the Tibetan plateau — the source of the great river systems of China, South-East and South Asia, including the Brahmaputra, Indus, Mekong, Salween, Yangzi and Yellow. These rivers, fed by Himalayan snowmelt, are a lifeline to the 1.4 billion people living in their basins.

Given China’s ambitious inter-basin and inter-river water transfer projects in the Tibetan plateau and its upstream damming of the Brahmaputra, Sutlej and other rivers, water is likely to become a cause of Sino-Indian tensions. If President Hu Jintao — a hydrologist by training who has served as party secretary in Tibet — begins China’s long-pending project to divert the waters of the Brahmaputra northwards to the parched Yellow River, it would constitute the declaration of a water war on lower-riparian India and Bangladesh. Climate change, in any event, will have a significant impact on the availability and flow of river waters from the Himalayas and Tibetan highlands, making water a key element in the national-security calculus of China and India.

The centrality of the Tibet issue has been highlighted both by China’s Tibet-linked territorial claim to Arunachal Pradesh and by its hydro projects on the plateau. Through its water-transfer projects, Beijing is threatening to fashion water into a weapon against India. Also, given the clear link between Tibet’s fragile ecosystem and the climatic stability of the Indian subcontinent, China’s reckless exploitation of Tibet’s vast mineral resources and its large engineering works there are already playing havoc with the ecology.

India and China may be 5,000-year-old civilizations, but it is often forgotten that the two have been neighbours for only the past 58 years. After all, it wasn’t geography but guns — the sudden occupation of the traditional buffer, Tibet, soon after the communists came to power in Beijing — that made China India’s neighbour. Nehru later admitted he had not anticipated the swiftness and callousness with which China forcibly absorbed Tibet because he had been “led to believe by the Chinese foreign office that the Chinese would settle the future of Tibet in a peaceful manner by direct negotiation with the representatives of Tibet”.

Latest developments are a reminder that the 1962 war did not fully slake China’s geopolitical or territorial ambitions. In fact, instead of building a win-win relationship with India based on a constructive, forward-looking approach, China still harks back to the past, to the unfinished business of 1962, by assertively laying claim to additional Indian territories while blocking progress on defining the long line of control separating the two countries. Such intransigence and expansionist intent come even as it continues to occupy one-fifth of the original state of Jammu and Kashmir and steps up its cross-border incursions into India.

It is against this background that a key question emerges: what if China sets out to “teach India a lesson” again? This is a question that can no longer be brushed aside, considering China’s growing proclivity to up the ante against India. Henry Kissinger once said China is a closed society with an open mind, while India is an open society with a closed mind and a know-all attitude. It was that attitude — and the refusal to heed the warning signs — that caught India by surprise when the Chinese army poured in from two separate fronts in 1962.

Today, two words define India’s China policy: confusion and forbearance. Caution with prudence is desirable. But can India afford to be overcautious, clueless and indulgent? In the celebrated words of Edmund Burke, those who fail to learn from history are sure to repeat history. Whatever India learned from 1962 seems to have been forgotten, with the country now torn by internal squabbling and policy disarray.

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

http://www.covert.co.in/brahma.htm

One Man’s Nuclear Brinkmanship

Posted on July 20, 2008 by Chellaney

Don’t court nuclear trouble

The U.S.-India nuclear deal will institutionalize India’s status in an anomalous third category — neither a nuclear power nor a non-nuclear-weapons state, but an errant nation with a rudimentary arsenal to be tethered to the non-proliferation regime in order to tame its nuclear waywardness. Civil nuclear cooperation is the lure to achieve that aim.

Brahma Chellaney

Asian Age, July 21, 2008

Two issues stand out on the partisan battle to push through the knotty US-India nuclear deal. The first is New Delhi’s agreement to place its entire civilian nuclear programme under NPT-system safeguards designed for non-nuclear-weapons states (NNWSs), with none of the rights the five established nuclear-weapons states (NWSs) have vis-à-vis the International Atomic Energy Agency. India is embracing not the voluntary, token and revocable inspections the NWSs accept on a few facilities. Rather, India is the first nuclear-armed state to agree to perpetual, legally immutable inspections covering its full civilian programme.

Contrast this with the Prime Minister’s assurances to the Lok Sabha on July 29, 2005: “We shall undertake the same responsibilities and obligations as other advanced nuclear states like the US”; “we expect the same rights and benefits” as the US; and “India will never accept discrimination”.

The second issue centres on New Delhi’s blithe readiness to import high-priced, foreign fuel-dependent reactors without securing any definite fuel-supply guarantee, or an unequivocal right to build a strategic fuel reserve to guard against a Tarapur-style cut-off, or an enforceable right to take specific corrective steps in case fuel supplies were unilaterally suspended. Had such rights undeniably been built into the deal, India’s placing of a host of indigenous facilities under permanent external inspection, including eight power reactors, three heavy water plants and six fuel-fabrication installations, could have been somewhat justifiable.

The India-IAEA “framework” safeguards accord is modelled not just on the INFCIRC/66 system (which was designed for NNWSs to cover individual plants and shipments of fuel), but also on the INFCIRC/153 inspections applicable to all NNWSs party to the NPT. For example, the clause on “subsidiary arrangements” between India and the Agency has been picked up from the INFCIRC/153 system.

Since it was first unveiled in 1972, the NPT-system INFCIRC/153 has been strengthened and expanded, including through the Agency’s “Programme 93+2”. The India-IAEA framework accord — read with the Hyde Act — meshes with key provisions of this upgraded NPT-system safeguards, now known as INFCIRC/153 (Corrected), with one major exception: Unlike the “full-scope” safeguards of the INFCIRC/153 system covering all nuclear facilities and materials in a state, the IAEA inspections in India will extend only to the facilities and materials designated by New Delhi as civilian.

The IAEA has fashioned three instruments to ensure not just the non-diversion of declared nuclear materials, but also to prevent undeclared nuclear activity. The Agency, oddly, will have all these three instruments available against a nuclear-armed India: (i) “special inspections”, also known as “challenge” inspections; (ii) the early provision of design information by the state to deter the secret building of a facility, as has been alleged in the recent case of Syria; and (iii) the Additional Protocol, which greatly expands the IAEA’s rights of access to information and locations in a NNWS.

Special inspections and the early provision of design information are part of both the INFCIRC/66 and the INFCIRC/153 systems, while the “model” Additional Protocol, published as INFCIRC/540, has been fashioned to further strengthen the INFCIRC/153 system in NNWSs. While the shape of the Additional Protocol for India will be known only after it has been negotiated, the Hyde Act demands that it be “based on a Model Additional Protocol as set forth in IAEA information circular (INFCIRC) 540”. Indeed, one of the conditions the Act stipulates for the deal to win congressional ratification is presidential determination that “India and the IAEA are making substantial progress toward concluding an Additional Protocol”.

By hastily taking the safeguards accord to the IAEA board for approval before the contours of India’s Additional Protocol with the Agency have been clarified, the Prime Minister is only undermining the country’s leverage and making it more likely that the final product will be close to INFCIRC/540.

In fact, with the India-IAEA framework accord incorporating the standard provisions designed for NNWSs — from special inspections and the early provision of design information, to the upholding of the GOV/1621 (1973) document that enshrines the “perpetuity” and “pursuit” clauses and asserts the Agency’s overriding authority on termination matters — it will be little surprise if the Additional Protocol India concludes resembles the one for NNWSs.

Such an Additional Protocol will offer the Agency the means to create civil-military “firewalls” in India and deter the transfer of specialized equipment, trained personnel, designs and operating manuals to the strategic programme. With the invasive access it grants, the Additional Protocol is a much-more useful tool for the IAEA than special inspections, which have been formally invoked only twice up until now, including once at Romania’s request to clear up outstanding discrepancies from Nicolae Ceausescu’s regime.

Against this background, the safeguards arrangements India is entering into are far-reaching and cannot be compared with the facility-specific agreements it currently has with the IAEA over the reactors at Kundakulam, Tarapur and Rajasthan, even though the 1988 Kundakulam safeguards accord is a typical INFCIRC/66 accord. The new framework accord, designed to supersede all these individual agreements, opens the path to drafting India into the NPT regime as a de facto party, without recognizing its nuclear-armed status.

The only deviation from a standard safeguards agreement with a NNWS found in this accord — apart from the preambular contextual noting that the necessity of safeguards application flows from India’s “understandings” with the US (as opposed to NPT requirements) — is the “general principle” that the Agency’s safeguards-related work shall not “hinder or otherwise interfere with any activities involving the use by India of nuclear material, non-nuclear material, equipment, components, information or technology produced, acquired or developed by India independent of this agreement for its own purposes”.

Given the standardized NNWS safeguards model this agreement represents, one wonders why it took Indian negotiators nearly six months to finalize the text with the IAEA. Were the negotiations largely about preambular references to help New Delhi save face? When a country with nuclear weapons, without utilizing the leverage emanating from its readiness to place an array of indigenous facilities under safeguards, initials a comprehensive agreement that is a virtual replica of a standard safeguards accord for NNWSs, can it then credibly claim — on the basis of mere preambular references — to have won special rights unavailable to NNWSs?

The Vienna Convention on the Law of Treaties precludes India from seeking any right not defined in the agreement just because the preambular language notes New Delhi’s point that an “essential basis” of its “concurrence to accept Agency safeguards” is the “conclusion of international cooperation arrangements creating the necessary conditions for India to obtain … reliable, uninterrupted and continuous access to fuel supplies from companies in several nations, as well as support for an Indian effort to develop a strategic reserve of nuclear fuel…” Whether such purported international arrangements have been concluded or not is merely an assertion by India with no attempt to tie the Agency to them.

Also, by holding New Delhi to everlasting obligations, the accord leaves no room for any corrective step, even if India is faced with a fuel cut-off. Once India has voluntarily opened indigenous facilities to IAEA inspections, it is unlikely to be able to withdraw any from safeguards.

Not only are the accord’s terms stringent, with inspections to continue until “the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards”, such attempted withdrawal would unacceptably turn the original US-India bargain on its head. The US agreed to give India limited access to imported uranium in return for New Delhi’s decision to place 20 indigenous nuclear facilities (plus nine research institutions) under safeguards and to shut down by 2010 the Cirus research reactor, which produces one-third of the country’s weapons-grade plutonium.

If the official claim is that the safeguards accord has been cleverly worded to help India take “unspecified sovereign actions” in a contingency — as nuclear chief Anil Kakodkar has contended — such ingenuity in fashioning ambiguities could carry serious long-term strategic costs. The equivocation indeed may be spring-loaded to produce tragedy later. If India will not learn from its Tarapur experience, despite the clearly worded 123 agreement with the US in 1963 and an equally good safeguards accord with the IAEA in 1971, it is bound to court bigger trouble. In fact, the greater the Indian investments in imported power reactors, the greater will be the risks and constraints New Delhi will face.

The risks of misunderstandings and hard times later have only been underscored by the polar-opposite US and Indian public stance today on some key aspects of the deal. The wide gap in the Indian and American positions, even if partly geared toward garnering political support at home, would stand exposed if the US government, for example, lifted its gag order on the written answers it submitted to the House Committee on Foreign Affairs on critical questions, such as whether India will be permitted to stockpile nuclear fuel.

The safeguards accord shows that the deal will institutionalize India’s status in an anomalous third category — neither a NWS nor a NNWS, but an errant nation with a rudimentary arsenal to be tethered to the non-proliferation system through stringent international inspections and other fetters designed to tame its nuclear waywardness. Civil nuclear cooperation is the lure to help retard the Indian nuclear-weapons capability while reaping billions of dollars in reactor sales, with the Hyde Act openly targeting India’s arsenal for “reduction and eventual elimination”.

Once all the Indian facilities currently classified as “civilian” come permanently in the IAEA-inspection grip it would actually bring under safeguards the majority of the present “unsafeguarded” nuclear facilities in operation worldwide outside the Club of Nuclear Five — a huge gain for the U.S.-led international non-proliferation regime.

The deal poses one of the most divisive challenges India has ever faced. Whether the government survives the vote of confidence in Parliament or not, the partisan rancour will only deepen unless genuine efforts are made to bridge the divide over an issue that centres on the future of India’s nuclear programme and strategic autonomy. Thanks to the crusading zeal with which it has been pushed and the furtive way it was taken to the IAEA board, the deal will haunt India for long.

India-IAEA Safeguards Agreement Fact Sheet

Posted on July 12, 2008 by Chellaney

LET FACTS SPEAK FOR THEMSELVES

Brahma Chellaney

The safeguards accord with the Vienna-based International Atomic Energy Agency (IAEA) was initialled by India on July 7, 2008, and thereafter the IAEA set in motion the process for the ratification of the agreement by its governing board. According to an IAEA press release dated July 9, 2008: “The Chairman of the Board is consulting with Board Members to agree on a date for a Board meeting when the Agreement would be considered”.[1] Titled, “An Agreement with the Government of India for the Application of Safeguards to Civilian Nuclear Facilities”,[2] the accord brings out the following facts:

■ The accord largely resembles IAEA agreements with non-nuclear-weapons states and incorporates few India-specific features. With the exclusion of the first two pages that contain the preamble, and an acknowledgement in the General Principles that the “application of safeguards under this agreement is intended to facilitate implementation of relevant bilateral or multilateral arrangements to which India is a party” (in other words, arrangements unrelated to the Nuclear Non-Proliferation Treaty), the text is largely modelled on IAEA safeguards agreements with non-nuclear-weapons states. The text has been drawn from the strengthened INFCIRC-66/Rev.2 (16 September 1968) model,[3] available at: http://www.iaea.org/Publications/Documents/Infcircs/Others/inf66r2.shtml

In fact, there is no direct reference in this accord to the existence of an Indian nuclear military programme or an acknowledgement of India’s special status — a nuclear-weapons state uniquely doing what no other nuclear power has done: putting its entire civilian nuclear programme under permanent, legally irrevocable international inspections.

All that the accord contains is a oblique reference in the preamble in the following words: “Noting the relevance for this Agreement of the understandings between India and the United States of America expressed in the India-U.S. Joint Statement of 18 July 2005, in which India, inter alia, has stated its willingness: to identify and separate its civilian and military nuclear facilities and programmes in a phased manner”.

In fact, the accord lays the ground for IAEA inspectors to enforce safeguards with the same stringency applicable to non-nuclear-weapons states.

Contrast this with the repeated assurances the Prime Minister had given to Parliament. For example, speaking in Parliament on March 7, 2006, the Prime Minister had said: “India will approach the IAEA to discuss and fashion an India-specific safeguards agreement, which will reflect the unique character of this arrangement”.

■ India will have none of the rights that the five established nuclear-weapons states have vis-à-vis the IAEA. Nuclear-weapons states accept only voluntary, revocable inspections, with just a total of 11 facilities in the U.S., China, Britain, France and Russia currently open to IAEA inspection. The IAEA conducts only token inspections on these facilities offered for safeguards. Moreover, these five nuclear powers have the sovereign right to terminate their safeguards agreement with the IAEA.

The India-IAEA safeguards accord comes with perpetual, legally irrevocable obligations, which India cannot suspend or end, even if the supplier-states cut off supply of fuel and replacement parts. The IAEA inspections in India will not be nominal but stringent and invasive, of the type applicable to non-nuclear-weapons states.

While the five established nuclear powers have offered only 11 facilities in total for IAEA safeguards, India has agreed to place 35 of its facilities under IAEA inspection, according to the civil-military separation plan presented to Parliament by the Prime Minister in 2006.[4] These facilities include 14 power reactors; three heavy-water plants at Thal-Vaishet, Hazira and Tuticorin; six installations at the Nuclear Fuel Complex in Hyderabad; the PREFRE reprocessing plant at Tarapur; and nine research facilities, such as the Tata Institute of Fundamental Research, Board of Radiation and Isotope Technology and Saha Institute of Nuclear Physics. In addition, the Prime Minister has agreed to shut down by 2010 the Cirus research reactor, which is one of the two research reactors in India producing weapons-grade plutonium.[5]

The provisions of the safeguards accord contradict Dr. Manmohan Singh’s assurances to Parliament that India will accept only the “same responsibilities and obligations as other advanced nuclear states like the U.S.” For example, speaking in the Lok Sabha on July 29, 2005, the Prime Minister said: “We shall undertake the same responsibilities and obligations as … the US”; “we expect the same rights and benefits” as the US; and “India will never accept discrimination”.

Unlike the five established nuclear-weapons states, India will have no right under the safeguards accord to take any facility out of IAEA inspections merely by changing its classification from “civilian” to “military”. Contrast this with the confident claim the Prime Minister’s Office made in its July 29, 2005 “Backgrounder” on the deal: “Nuclear weapon states, including the U.S., have the right to shift facilities from civilian category to military and there is no reason why this should not apply to India”.

■ The accord carries a cosmetic reference to “corrective measures” in the preamble, but gives India no actual right to take corrective measures. The earlier 123 agreement with the U.S., instead of granting India the right to take corrective measures in response to a fuel-supply disruption, merely recorded that New Delhi will seek such a right in the IAEA accord. But in the India-IAEA accord, no such right has been secured in definable terms. In fact, the agreement makes that India’s safeguards obligations will be irrevocably final once it enters into force.

There is only one reference to “corrective measures” in the entire text of the India-IAEA accord, and that reference occurs in the preamble. That reference reads: “India may take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies”. The use of the term “may” instead of “shall” shows there is no legal entitlement.

Moreover, far from “corrective measures” being defined, the accord explicitly forecloses that option by making it clear that, under no circumstance, will India be allowed to withdraw from its safeguards obligations, which are legally immutable.

The term, “corrective measures”, indeed does not figure in the accord’s Section XI on “Definitions”. So, is it any surprise that not one corrective measure has been identified in the accord even by way of a preambular statement?

As IAEA Director-General Mohamed ElBaradei noted on August 1, 2008, in his introductory statement to the Governing Board meeting, "the agreement is of indefinite duration. There are no conditions for the discontinuation of safeguards other than those provided by the safeguards agreement itself. The termination provisions contained in the agreement are the same as for other 66-type agreements. Naturally — as with all safeguards agreements — this agreement is subject to the general rules of international law. Therefore, the agreement should be read as an integral whole. The preamble provides for contextual background and safeguards are implemented in accordance with the terms of the agreement" [emphasis added].

Contrast this with the Prime Minister’s solemn assurances to Parliament on several occasions. For example, speaking in Parliament on March 7, 2006, the PM had given the following assurance: “In essence, an India-specific safeguards would … permit India to take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies. Taking this into account, India will place its civilian nuclear facilities under India-specific safeguards in perpetuity and negotiate an appropriate safeguards agreement to this end with the IAEA”. Then, on August 17, 2006, the PM said in Parliament: “In the event of disruption of fuel supplies despite the assurances, India will have a right to take corrective measure to ensure the operation of its nuclear reactors”.

■ The accord provides for no guaranteed fuel supply and, contrary to the PM’s assurances in Parliament, has no link between perpetual IAEA inspections and perpetual fuel supply.

Put simply, India has willingly forfeited the right to enforce lifelong fuel supply for safeguarded reactors by agreeing to remain powerless in a Tarapur-style fuel cut-off situation.

Indeed, the only reference to fuel supply occurs in the preamble, in the form of a note by India. It reads: “An essential basis of India’s concurrence to accept Agency safeguards under an India-specific safeguards agreement (hereinafter referred to as “this Agreement”) is the conclusion of international cooperation arrangements creating the necessary conditions for India to obtain access to the international fuel market, including reliable, uninterrupted and continuous access to fuel supplies from companies in several nations, as well as support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply over the lifetime of India’s reactors”. There is, however, no reference in the body of the text to “fuel supply” or to a “strategic reserve of nuclear fuel”.

The ornamental reference in the preamble was inserted to save face because its language makes explicit that India is not tying the IAEA to assured fuel supply but merely recording that the safeguards accord follows the “conclusion of international cooperation arrangements creating the necessary conditions for India to obtain access” to assured fuel supply and to receive support to build a strategic fuel supply. But the harsh truth is that no such international arrangements have thus far been concluded.

This attempt to pull the wool on public eyes flows from India’s failure to secure its rights in the 123 agreement, which confers enforceable powers only on the supplier-state. In fact, the Indian fuel supply-related claims about the 123 agreement have bordered on comedy: The U.S. assurances in Article 5.6 are all prospective, not present-day, with the U.S. “committed to seeking agreement from the U.S. Congress to amend its domestic laws” and “prepared to take” additional steps.

Contrast all this with the repeated assurances the PM gave to Parliament since March 2006 that the perpetual safeguards would be tied to perpetual fuel supply. In August 2006, he told Parliament, for instance, that: “An important assurance is the commitment of support for India’s right to build up strategic reserves of nuclear fuel over the lifetime of India’s reactors”.

The accord carries no reference to the continuation of India’s safeguards obligations being contingent on perpetual fuel supply. The agreement indeed explicitly blocks India from ever undertaking real correction in response to a fuel supply cut-off — the lifting of IAEA safeguards.

■ Preambular references confer no entitlement on India. Just because the preambular language takes note of India’s point that the “basis” of its “concurrence to accept Agency safeguards” is the “conclusion of international cooperation arrangements” does not give India any right not specified in the agreement.

It is well-established in international law that no rights to any party flow from preambular references — which are usually intended to provide background or context to an agreement — unless any such reference is spelled out in the body of the accord or treaty to confer a definable entitlement or to impose a specific obligation. As IAEA Director-General Mohamed ElBaradei pointed out on August 1, 2008, the agreement’s "preamble provides for contextual background".

Thus, the mere appearance in the preamble of the terms, “reliable, uninterrupted and continuous access to fuel supplies”, “a strategic reserve of nuclear fuel” and “corrective measures” (to record professed arrangements other than with the IAEA), cannot be used to claim rights or obligations not contained in the operative parts of the agreement.

In any case, the safeguards accord identifies the IAEA board as the final arbiter of any dispute over interpretation or compliance, with India entitled only to make its submission to the board.

It is significant that after having trashed the Hyde Act’s Sections 102 and 103, titled “Sense of Congress” and “Statements of Policy”, as preambular references not binding on the US president, New Delhi has taken refuge in the preamble of its safeguards accord with the IAEA. While most of the Hyde Act’s Section 102 and Section 103 items have been spelled out in the body of the legislation, the preambular references in the safeguards accord that New Delhi cites have not been defined or elaborated in the text.

The key point is that the safeguards accord enforces no obligation on the Agency to guarantee uninterrupted fuel supply for the lifetime of India’s safeguarded reactors or to underwrite the building of an Indian strategic fuel reserve. The IAEA, under its statute, does not, in any event, have a role to play in providing fuel-supply or strategic-reserve assurances.

■ The safeguards accord, like the 123 agreement, is consistent with the provisions of the Hyde Act.

Section 104(b)(2) of the Hyde Act stipulates that the U.S. Congress can consider ratifying the final deal only after, inter-alia, “India and the IAEA have concluded all legal steps required prior to signature by the parties of an agreement requiring the application of IAEA safeguards in perpetuity in accordance with IAEA standards, principles and practices (including IAEA Board of Governors Document GOV/1621 (1973)) to India’s civil nuclear facilities, materials, and programmes…”

While India’s desire was for a special, “India-specific” safeguards arrangement with the IAEA, the Hyde Act’s stipulation was for India to embrace the same standards and practices as applicable to non-nuclear-weapons states. In addition to the safeguards accord, India will have to separately negotiate and conclude an “Additional Protocol” with the IAEA. The “Additional Protocol” will seek to ensure that specialized equipment, trained personnel, and designs and operating manuals are not transferred from the civilian programme to the military programme. The Hyde Act demands that the “Additional Protocol” for India be “based on a Model Additional Protocol as set forth in IAEA information circular (INFCIRC) 540” — that is, the Protocol applicable to non-nuclear-weapons states. In contrast, the Prime Minister had assured Parliament on August 17, 2006, that, “As a country with nuclear weapons, there is no question of India agreeing to a safeguards agreement or an Additional Protocol applicable to non-nuclear-weapons states of the NPT”.

As mandated by the Hyde Act, the India-IAEA safeguards accord is firmly anchored in the GOV/1621 (1973) document. For example, the safeguards accord’s Paragraph 29 reads: “The termination of safeguards on items subject to this Agreement shall be implemented taking into account the provisions of GOV/1621 (20 August 1973)”.

Although the text of the GOV/1621 document is not public, its central stipulation is well-known — that facility-specific safeguards shall be “in perpetuity”, allowing for no suspension of international safeguards and shutting out room for corrective measures. Such are the known conditions of GOV/1621 that the rights and obligations of the parties continue perpetually on all nuclear materials until the materials have been returned or all the fissionable material supplied, produced or processed goes out of the inventory.

■ Even the accord’s termination and non-compliance provisions are identical to those for non-nuclear-weapons states, creating potential risks since India possesses a nuclear military programme.

India has accepted the IAEA board as the final arbiter on any issue of non-compliance. Paragraph 103 states, “If the Board determines in accordance with Article XII.C of the Statute of the Agency that there has been any non-compliance by India with this Agreement, the Board shall call upon India to remedy such non-compliance forthwith, and shall make such reports as it deems appropriate. In the event of failure by India to take full remedial action within a reasonable time, the Board may take any other measures provided for in Article XII.C of the Statute”.

Such measures include what the IAEA board has done in the case of Iran — refer the case to the UN Security Council for sanctions — although the Agency thus far has found no clear evidence of Iran’s pursuit of a nuclear-weapons programme in violation of its legal obligations. The Iran case has shown that the IAEA, although a technical body, is open to political pressures and can be pressed to take political action. The IAEA board, however, has a record of staying conservative on most matters, by erring on the side of caution.

Under Paragraph 32 of the India-IAEA accord, New Delhi can withdraw a facility from safeguards with the prior consent of the IAEA but only after “the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards,” which means the installation’s nuclear capability has been dismantled or permanently disabled to the Agency’s satisfaction.

That is in keeping with the fact that all INFCIRC/66/Rev.2 agreements since 1974 have been tied to the actual use in the recipient-state of supplied material or items, rather than to fixed periods of time. The safeguards, however, extend to all subsequent generations of produced nuclear material derived from original supplies. The INFCIRC/66.Rev.2 standard also precludes a country withdrawing any designated civilian facility from safeguards on national security grounds.

Once the India-IAEA safeguards accord enters into force, its “pursuit” and “perpetuity” clauses would irreversibly come into play, with inspections chasing the by-products wherever they go.

Paragraph 29 of the India-IAEA accord (“the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards"), however, raises the interesting question whether India, faced with a fuel cut-off, will have the right to withdraw from safeguards the eight indigenous power reactors it is opening to outside inspection. According to papers by two legal experts on GOV/1621, Antonio F. Perez[6] and Laura Rockwood[7], the answer may be yes, if India first removes, to IAEA’s full satisfaction, all supplied fissionable material used or processed in those reactors.

However, the answer may be no, if one goes by the safeguards accord’s stringent termination proviso (“the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards”) and the American intent in getting India to place eight indigenous power reactors under safeguards in return for opening up limited access to imported uranium. It would turn that bargain on its head if India withdrew those power reactors from safeguards.

■ A nuclear-armed India has agreed to be subject to intrusive “challenge” inspections of the type the IAEA is empowered to carry out in non-nuclear-weapons states. “Challenge” inspections are officially known as “special inspections” (as distinct from systematic or routine inspections).

Refusal to allow a special inspection could lead to an IAEA report to the UN Security Council on non-compliance, as happened in the North Korean case. However, till date, the IAEA has formally invoked special inspections only twice — in 1992, at Romania’s request to clear up outstanding discrepancies that occurred under Nicolae Ceausescu’s regime, and in 1993, when the IAEA, with the aid of information provided by the U.S., became aware of inaccuracies in North Korea’s initial report.

In his book, Arms control: The New Guide to Negotiations and Agreements (Sage, 2002), Jozef Goldblat states, “An inspection is considered ‘special’ when it is either additional to routine inspection or involves access to information or locations in addition to the access specified for routine inspections in the agreement”.[8]

Paragraph 63 of the India-IAEA accord states the “Agency may carry out special inspections if: (a) the study of a report indicates that such inspection is desirable; or (b) any unforeseen circumstance requires immediate action. The Board shall subsequently be informed of the reasons for and the results of each such inspection”.

In other words, the Agency will have the right to carry out “special inspections” if it believed any activity at a safeguarded Indian facility or any report raised questions. In the North Korean case, the board had approved the special inspections which the Pyongyang refused to allow.[9] But India, in its accord with the IAEA, has consented to be subject to special inspections without the board’s prior consent.

■ In addition to special inspections, India has consented to another provision intended to preclude undeclared activity in a non-nuclear-weapons state — the early provision of design information.

IAEA safeguards in non-nuclear-weapons states are not just about the non-diversion of declared nuclear materials. They are also designed to credibly ensure that there no undeclared nuclear materials or activities in the state concerned. Toward that end, the Agency has fashioned three instruments that are now part of the INFCIRC/153 agreements that apply “full-scope” or comprehensive safeguards to cover all facilities and materials in non-nuclear-weapons states: (i) “special inspections”; (ii) the early provision of design information to deter the secret building of a facility, as has been alleged in the recent case of Syria; and (iii) Additional Protocol, which greatly expands the IAEA’s rights of access to information and locations in a state.

Oddly, the Agency will have all the three instruments vis-à-vis India, even though the safeguards accord is based on India’s sovereign decision to segregate its civil and military nuclear facilities and open the civilian part to IAEA inspection in perpetuity. Given that undeclared activity in a country with a nuclear military programme is an oxymoron, it is remarkable that the IAEA is applying to India the very standards designed for non-nuclear-weapons states.

India’s commitment to the early provision of design information to the IAEA is contained in Paragraphs 34 and 39-42 of the accord. The idea behind these paragraphs is to secure preliminary information — in the name of effectively applying safeguards later — as soon as India makes a decision to build or modify a facility.

Just as the India-IAEA safeguards accord has been largely modelled on INFCIRC-66/Rev.2 standards and principles, as expanded by the GOV/1621 (1973) document, the Additional Protocol is also likely to follow the prescription of the U.S. Congress. The Hyde Act has stipulated that the Additional Protocol for India be “based on a Model Additional Protocol as set forth in IAEA information circular (INFCIRC) 540” — that is, the Protocol applicable to non-nuclear-weapons states.

■ India will not only open its entire civil programme to external safeguards, but also help pay for such inspections. The costs of IAEA inspections will be high because, under the accord, India has agreed to be subject to rigorous safeguards, not the token inspections the Agency carries out in nuclear-weapons states.

The accord estimates the cost of inspection of each Indian facility at 1.2 million euro annually. India is to place 26 nuclear facilities under safeguards in a phased manner. (This figure excludes the nine research institutions listed on the civil side of the separation plan. There may be no reason for the IAEA to inspect them if they contain no nuclear material.)

Commercial power reactors, reprocessing and other facilities with an annual throughput of more than 60 kilograms of nuclear material are to be subject to “continuous inspection”, with the IAEA having the right of access at all times. The Agency, however, has agreed to implement the accord in a manner not to hamper “India’s economic or technological development, and not to hinder or otherwise interfere with any activities involving the use by India of nuclear material, non-nuclear material, equipment, components, information or technology produced, acquired or developed by India independent of this agreement for its own purposes”. It has also agreed that the “number, duration and intensity of inspections actually carried out shall be kept to the minimum consistent with the effective implementation of safeguards…” (Paragraph 57).

Without making clear what will be New Delhi’s share of the costs, Paragraph 101 of the accord says: “India and the Agency shall each bear any expense incurred in the implementation of their responsibilities under this agreement”. But with the Hyde Act mandating “fallback US safeguards” in case “budget or personnel strains in the IAEA” render it “unable” to fully enforce inspections, India may be compelled to pick up most of the IAEA expenses to avoid parallel US inspections — a possibility National Security Adviser M.K. Narayanan has already alluded to.

■ The key benchmarks enshrined in the original July 18, 2005, deal today stand jettisoned.

Those benchmarks, in the Prime Minister’s own words in the Lok Sabha on July 29, 2005, include India acquiring “the same benefits and advantages as other states with advanced nuclear technology” and undertaking “the same responsibilities and obligations as such countries, including the United States.” The PM had said: “Reciprocity is the key to the implementation of all the steps… Indian actions will be contingent at every stage on actions taken by the other side.”

The PM, however, has acquiesced to the shifting of the July 18, 2005, goalposts despite his unequivocal assurances to Parliament that the principles embodied in the original accord were inviolable and constitute the sole criteria. After pledging that “we will never accept discrimination”, the PM has ended up doing just that.

The blunt fact is that the deal has got mangled beyond recognition since it was unveiled three years ago. Indeed, the deal has progressively picked up such tougher conditions that today few remember that the July 18, 2005, agreement-in-principle had promised India “the same benefits and advantages” as America. While the five main nuclear-weapons states have the unfettered right to shift facilities from the civilian sector to the military, India has agreed to lock its entire civilian programme in legally immutable safeguards.

Once all the currently designated Indian civilian facilities come under IAEA inspection it would mean the majority of the present “unsafeguarded” nuclear facilities in operation worldwide outside the Club of Nuclear Five becoming “safeguarded” — a huge gain for the U.S.-led international non-proliferation regime.

[1] IAEA press release at: http://www.iaea.org/NewsCenter/PressReleases/2008/prn200808.html

[2] Full text of the India-IAEA agreement is available at:

Part I http://chellaney.spaces.live.com/blog/cns!4913C7C8A2EA4A30!633.entry

Part II http://chellaney.spaces.live.com/blog/cns!4913C7C8A2EA4A30!632.entry

[3] The IAEA’s first model safeguards document (INFCIRC/26) was adopted in January 1961. A completely revised document applicable to larger reactors was approved by the board in September 1965 and became known as INFCIRC/66. Annex I to INFCIRC/66, containing provisions for reprocessing plants, was adopted in 1966, and Annex II, incorporating provisions for safeguarded nuclear material in conversion and fuel fabrication plants, was agreed to in 1968. With its two annexes, the strengthened safeguards document (INFCIRC/66/Rev.2) was adopted by the board after the NPT opened for signature on July 1, 1968. Under an INFCIRC/66/Rev.2 agreement, a recipient-state is barred from suspending or terminating its safeguards obligations, even if the supplier-state reneges on its commitments.

[4] Full text of India’s Separation Plan available at: http://chellaney.spaces.live.com/Blog/cns!4913C7C8A2EA4A30!429.entry

[5] The decision to shut down Cirus goes against the official contention that the deal has no bearing on the strategic programme. Before the Separation Plan was negotiated with the U.S., the Prime Minister had committed himself in the Lok Sabha on August 3, 2005 in the following words: “This separation will be decided voluntarily, solely on the basis of our own judgement. Nobody can from outside, say: ‘Well, this is civilian, this is nuclear’. That determination will be made by the people of India, by our government, by our atomic energy establishment…” On August 4, 2005, he was equally emphatic in Rajya Sabha: “It will be an autonomous Indian decision as to what is ‘civilian’ and what is ‘military’. Nobody outside will tell us what is ‘civilian’ and what is ‘military’.” But although Dr Singh had foresworn actions “limiting or inhibiting our strategic nuclear-weapons programme”, he decided to shut down by 2010 the research reactor that contributes one-third of India’s annual weapons-grade plutonium production. Tellingly, no replacement reactor has come under construction thus far.

[6] Antonio F. Perez, “Survival of Rights Under The Nuclear Non-Proliferation Treaty: Withdrawal and the Continuing Right of International Atomic Energy Agency Safeguards”, 34 Va. J. Int’l L. 749 (Summer 1994).

[7] Laura Rockwood, “Legal Instruments Related to the Application of the Safeguards”, available at: http://www.opanal.org/Articles/Jamaica/jam-Rockwood.htm

[8] Relevant excerpt from Jozef Goldbat’s book at: http://books.google.co.in/books?id=XW7sediIGVsC&pg=PA321&lpg=PA321&dq=%22challenge%22+inspections+IAEA&source=web&ots=GcOHN8k8-K&sig=3Yml_u4KIoMG-71DJXs2GPdcNmY&hl=en&sa=X&oi=book_result&resnum=10&ct=result

[9] Fiona Simpson, “IAEA Special Inspections After Israel’s Raid on Syria”, Bulletin of the Atomic Scientists, February 10, 2008.

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America’s NSG proposal: Implications for India

The cleverly worded U.S. draft to the Nuclear Suppliers’ Group (NSG) for carving out an exemption for India from the NSG rules (called “guidelines”) seeks to irrevocably tether New Delhi to the nuclear non-proliferation regime. What is significant is that this draft proposal was submitted on August 8, 2008, to the NSG chair, Germany, after consultations with the Indian government.

Although New Delhi may have expressed satisfaction with its inoffensively packaged wording, the draft proposal carries serious implications for India. The draft is likely to attract even more India-specific conditions when it is taken up for consideration by the NSG, given the cartel’s consensual decision-making process. But consider the following implications of the existing draft, which in essence conforms to the Hyde Act provisions:

1. India is being brought under a wider non-proliferation net, with the US draft tying it to compliance with the entire set of NSG rules. Apart from being allowed to retain some nuclear facilities in the military realm, India will be treated, for all intents and purposes, as a non-nuclear-weapons state by the NSG and thus subject to the non-proliferation conditionalities applicable to such states. India, in other words, is to be drafted into the NPT as a de facto party.

Except for exempting India from one key NSG provision, the draft permits exports to “safeguarded” Indian facilities “provided the transfer satisfies all other provisions” of Part 1 & 2 of the NSG Guidelines — that is, all the rules pertinent to non-nuclear-weapons state.

The exemption relates to the “full-scope” (comprehensive) safeguards rule listed in paragraphs 4(a), 4(b), 4(c) of Part 1 and 4(b) of Part 2 of the NSG Guidelines, which have been published by the International Atomic Energy Agency as document INFCIRC/254. India had to be exempted from the application of safeguards on each and every nuclear facility, given the fact that it has some nuclear military facilities.

2. India is acquiescing to its unilateral test moratorium being turned into a multilateral legality. The draft US proposal, in Section 2, first lists India’s commitments, including to “continuing its unilateral moratorium to nuclear tests”. Then, in Section 3, it recommends permitting exports to India for peaceful purposes for use in safeguarded civilian nuclear facilities, “provided that the transfer satisfies all other provisions” of Part 1 & 2 of the NSG Guidelines.

Bearing in mind that the NSG Guidelines relate to transfers to non-nuclear-weapons states, India will have to live up to all the stipulated non-proliferation commitments and abjure activities proscribed for non-nuclear-weapons states. What was a unilateral test moratorium is to become, in effect, a requirement for civil nuclear cooperation with other states. The implication of treating India as a non-nuclear-weapons state and of implicitly “multilateralizing” its voluntary test moratorium is that India will face a fuel supply cut-off if it ever dared to test, leaving its imported power reactors high and dry.

This has to be seen against the backdrop of the Hyde Act and the so-called 123 Agreement. The 123 Agreement incorporates an implicit test ban by: (i) granting the U.S. the right to seek the return of supplied items and materials on account of a US-determined Indian non-compliance with non-proliferation conditions; and (ii) arming the U.S. with an open-ended right to suspend supplies forthwith simply by issuing a one-year termination notice on any ground, however extraneous.

The Hyde Act’s Section 106 explicitly bans Indian testing forever. That section is the mother of all prohibitions.

In effect, India is being dragged through the backdoor into the Comprehensive Test Ban Treaty (CTBT).

3. Instead of the “full” civil nuclear cooperation that the original July 18, 2005 deal promised, India access to civil enrichment and reprocessing technologies will be restricted through the proposed NSG waiver. The US draft to the NSG, in Section 3b, states that transfers may take place to safeguarded facilities in India, “provided that the transfer satisfies all other provisions of Part 2”. But Part 2 of the NSG Guidelines incorporates a presumption of denial of reprocessing and enrichment equipment and technology even under safeguards.

The presumption of denial in Part 2 of the Guidelines is contained in the following words in its Section 4: A supplier-state “should exercise prudence in order to carry out the basic principle and should take relevant factors into account, including … Whether the equipment, materials, software, or related technology to be transferred is to be used in research on or development, design, manufacture, construction, operation, or maintenance of any reprocessing or enrichment facility”.

That India will face a continued embargo on importing equipment and components related to reprocessing and enrichment, even when such activities are under IAEA inspections and for peaceful purposes, has been underscored both by the 123 Agreement and the Hyde Act.

Not only does the Hyde Act debar transfer to India of any “sensitive” civil nuclear equipment or technology, but also its Section 105(a)(5) directs Washington to “work with members of the NSG, individually and collectively, to further restrict the transfers” of reprocessing, enrichment and heavy-water technologies to India. And to underscore the primacy of the Hyde Act, the 123 Agreement’s Article 5(2) states, “Transfers of dual-use items that could be used in enrichment, reprocessing or heavy water production facilities will be subject to the Parties’ respective applicable laws, regulations and license policies.”

Contrast such restriction with what the Prime Minister had pledged in Parliament on August 17, 2006 — that India will only settle for 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”.

4. The various good-faith declarations made by India in the July 18, 2005 joint statement with the U.S. are all being turned into binding, enforceable commitments multilaterally through the NSG, after having been incorporated into the Hyde Act. In other words, the NSG is being asked to allow exports to “safeguarded” Indian facilities as long as India continues to fully meet the non-proliferation and safeguards commitments it voluntarily made on July 18, 2005. Those commitments have been listed in Section 2 of the US draft.

Furthermore, by additionally linking transfers to India to compliance with Part 1 and Part 2 of the NSG Guidelines, the US draft enlarges the non-proliferation net. For example, paragraph 4(e) of Part 2 of the NSG Guidelines demands that a supplier-state first consider, before making any transfer, “Whether governmental actions, statements, and policies of the recipient state are supportive of nuclear non-proliferation and whether the recipient state is in compliance with its international obligations in the field of non-proliferation”.

5. The good-faith commitments being multilateralized include the following: India’s adhere to the NSG rules unilaterally, although the NSG will not admit India as a member. The implication for India of entering into cooperation on the basis of unilateral adherence to the NSG guidelines is that this cartel could change its guidelines in the future to impose new conditions on India — and India would have no recourse to being at the receiving end, after having invested billions of dollars in imported reactors.

The Hyde Act actually holds out the threat of termination of cooperation if NSG amends its rules by saying, “No item subject to the transfer guidelines of the NSG may be transferred to India if such transfer would be inconsistent with the guidelines in effect on the date of the transfer”.

The US draft to the NSG merely suggests consultations with India on future amendments to the NSG guidelines, but gives India no say in the final decisions. As stated in Section 4 of the draft proposal, the NSG will “solicit such comments” from a non-member like India on proposed new amendments as to “facilitate their implementation by India”. The objective of soliciting “comments” would be to ensure India’s acceptance and compliance with a future amendment.

A Backfiring Nuke Deal

Posted on July 11, 2008 by Chellaney

Travails of a nuclear deal

By BRAHMA CHELLANEY

The Japan Times

In the twilight of George W. Bush’s presidency, there is an unseemly rush in Washington and New Delhi to seal a contentious but far-from-complete civil nuclear deal, even as that issue has landed India in a political crisis.

To help secure a much-needed feather for the empty caps of President Bush and Indian Prime Minister Manmohan Singh, moves are afoot to ram through the approvals the deal still needs from the International Atomic Energy Agency, the 45-nation Nuclear Suppliers’ Group and — at the very end — the U.S. Congress, which has to ratify the final package.

Yet, three years after it was unveiled with fanfare as an epoch-making accord, the deal’s final shape remains unclear and its future uncertain. Little time is left for the deal to win the remaining approvals during the Bush presidency. But rather than leave the final say to a future Barack Obama or John McCain administration — and a new Indian government — the two lame-duck heads of government, Bush and Singh, are seeking to make a final dash to wrap up the deal.

Singh had pledged that after returning home from the G8 meeting in Japan, he will take the deal to the next stage by sending the safeguards accord to the IAEA’s governing board for approval.

Bush, pressing Singh hard to move the deal forward, has promised an extraordinary NSG plenary meeting to consider a rule-change for India. In fact, by raising the phantom of rushed approvals, the Bush administration has not only lead Singh up the garden path but also emboldened him to precipitate a political crisis at home over the deal.

The showdown has seen Singh dump leftist groups for a new alignment with a prickly regional party to keep his shaky coalition in power. India has had weak governments but never a weaker leader than Singh. But today, Singh has promoted shadowy horse-trading to prevent his government’s collapse over his deal-related obsession.

At a time when Bush is set to exit the world stage and Singh’s 10-month remainder term could be cut shorter by political events at home, the deal is hardly the weighty issue that should merit urgency or determine any government’s future.

With or without the deal, the U.S.-India relationship is set toward closer engagement. This geopolitical direction was established long before the deal was unveiled in July 2005. The mistake has been to politically over-invest in the deal, going to the extent of meretriciously presenting it as the centerpiece of an emerging Indo-U.S. strategic partnership. No major relationship can afford to rise and fall on the strength of a single issue.

Also, with or without the deal, nuclear energy will continue to play a modest role in India’s energy mix. Even with an ambitious program involving reactor imports, the share of nuclear power in India’s total electricity generation is unlikely to significantly rise above the current 2.8 percent. Not only is the share of other energy sources rising faster in India, but new imported power reactors — because of the long lead time required for construction and commissioning — will start to produce electricity only after the mid-2010s at the earliest.

Although the original agreement- in-principle was embedded in a larger strategic framework — with the nuclear-related portion constituting only four paragraphs in a long joint statement — Singh sought to sell the deal principally as an arrangement to help meet India’s burgeoning energy needs. His energy spiel has contrasted starkly with the deal’s portrayal by the Bush administration as a means to advance U.S. strategic and commercial objectives in India.

Still, Bush and Singh continue to recite a major myth — that greater nuclear-generated electricity will help reduce India’s oil-import dependence and thereby pressures on world oil prices. With little overlap today in the oil and nuclear global-market structures, nuclear power competes principally against coal and natural gas, while oil is primarily used for transportation.

Reactor imports, far from cutting India’s oil needs, will only increase the already-wide domestic price differential between nuclear energy and coal-generated electricity and hydropower.

Power reactors also involve high up-front capital costs and drawn-out amortization periods that discourage private investors. The present electricity-market liberalization trends indeed spell trouble for the global nuclear-power industry because they threaten the state support on which it survives. As a 2005 IAEA study warns, "nuclear power’s market share might indeed follow a downward trajectory" if state subsidies abate and more cost-effective reactors are not designed.

However well-intentioned, a deal limited to one narrow area — commercial nuclear power — can hardly serve as a suitable framework to build a broad-based, enduring partnership between the most powerful and most populous democracies. Depicting the deal as a central element, if not the touchstone, of the U.S.-India partnership only suggests that the base of this relationship is still too small.

In fact, a deal touted as heralding a new era between the U.S. and India has actually succeeded in infusing controversy and complexity into that relationship.

While U.S. critics have worried the deal could dent the nonproliferation regime, no issue has proven more divisive in India in modern times than this accord. The progressive U.S. attachment of tougher conditions to make the deal more palatable to the nonproliferation constituency has only provoked an Indian backlash.

Singh repeatedly promised to build "the broadest possible consensus within the country to enable the next steps to be taken." But having failed to do that, he now is moving forward on his own.

In contrast, the much-maligned Bush administration has handled the deal domestically by forging an impressive political consensus. The law passed by Congress in December 2006 to govern the deal was the product of such consensus-building and political co-option, with the administration holding closed-door briefings for lawmakers and allowing its 3 1/2-page bill to be turned into a 41-page, conditions-stacked legislation. Bipartisan support also holds the key to the deal eventually winning congressional ratification.

In India, the growing partisan rancor does not augur well for the deal because it will have to be implemented well after the Singh has faded into history.

If the bilateral relationship is not to be weighed down by a political albatross, Washington and New Delhi need to ensure that the deal does not foster disputes that embitter and set back ties. A deal that is more about symbolism than substance, in any event, does not warrant a rush.

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: Thursday, July 10, 2008

A Factsheet on the India-IAEA Safeguards Accord

Posted on July 10, 2008 by Chellaney

A Flawed Safeguards Accord

Brahma Chellaney, Asian Age, July 11, 2008

It must have been doubly embarrassing for New Delhi that the Vienna-based International Atomic Energy Agency let the cat out of the bag even before Prime Minister Manmohan Singh had returned home from the G-8 summit. By revealing that “at the request of the Government of India” it had circulated the safeguards accord’s text to its board members and begun the process for an extraordinary board meeting, the IAEA belied New Delhi’s assurance to the nation not to approach the Agency before Dr. Singh had won a vote of confidence in Parliament.

Also, in helping to make the text public, the IAEA only mocked New Delhi’s claim that it cannot share the text even in confidence with “third parties”, like the Left, which had been propping up the governing coalition. In fact, after the text had appeared on various international websites since Wednesday night, New Delhi claimed credit on Thursday afternoon for “unveiling” it!

Now we know why the accord was shrouded in such secrecy. A careful reading of its text raises several red flags:

■ Far from it being an India-specific agreement, the accord resembles IAEA agreements with non-nuclear-weapons states. With the exclusion of the first two pages that contain the preamble, the accord starting from Section I, “General Directions,” on Page 3 to the very end, is largely modelled on IAEA safeguards agreements with non-nuclear-weapons state. In fact, there is no direct reference in this accord to the existence of an Indian nuclear military programme or an acknowledgement of India’s special status — a nuclear-weapons state uniquely doing what no other nuclear power has done: putting its entire civilian nuclear programme under permanent, legally irrevocable international inspections.

All the accord contains is a oblique reference in the preamble in the following words: “Noting the relevance for this Agreement of the understandings between India and the United States of America expressed in the India-U.S. Joint Statement of 18 July 2005, in which India, inter alia, has stated its willingness: to identify and separate its civilian and military nuclear facilities and programmes in a phased manner”. In fact, the accord lays the ground for IAEA inspectors to enforce safeguards with the same stringency applicable to non-nuclear-weapons states.

■ It carries a cosmetic reference to “corrective measures” in the preamble, but gives India no actual right to take corrective measures. The earlier 123 agreement with the US, instead of granting India the right to take corrective measures in response to a fuel-supply disruption, merely recorded that New Delhi will seek such a right in the IAEA accord. But in the India-IAEA accord, no such right has been secured in definable terms. There is only one reference to “corrective measures” in the entire text of the India-IAEA accord, and that reference occurs in the preamble. That reference reads: “India may take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies”. The use of the term “may” instead of “shall” shows there is no legal entitlement.

■ Not only is there no guaranteed fuel supply, but the accord also discredits what Dr. Singh had pledged in Parliament — to link perpetual IAEA inspections to perpetual fuel supply. Put simply, India has willingly forfeited the right to enforce lifelong fuel supply for safeguarded reactors by agreeing to remain powerless in a Tarapur-style fuel cut-off situation.

This attempt to pull the wool on public eyes flows from India’s failure to secure its rights in the 123 agreement, which confers enforceable powers only on the supplier-state. In fact, the Indian fuel supply-related claims about the 123 agreement have bordered on comedy: The US assurances in Article 5.6 are all prospective, not present-day, with the US “committed to seeking agreement from the U.S. Congress to amend its domestic laws” and “prepared to take” additional steps.

■ The safeguards accord, like the 123 agreement, is consistent with the provisions of the Hyde Act. Section 104(b)(2) of the Hyde Act stipulates that the US Congress can consider ratifying the final deal only after, inter-alia, “India and the IAEA have concluded all legal steps required prior to signature by the parties of an agreement requiring the application of IAEA safeguards in perpetuity in accordance with IAEA standards, principles and practices (including IAEA Board of Governors Document GOV/1621 (1973)) to India’s civil nuclear facilities, materials, and programmes…”

The safeguards accord, as mandated by the Hyde Act, is firmly anchored in the GOV/1621 (1973) document. For example, the safeguards accord’s Clause 29 reads: “The termination of safeguards on items subject to this Agreement shall be implemented taking into account the provisions of GOV/1621 (20 August 1973).”

Although the text of the GOV/1621 document is not public, its stipulation is well-known — that facility-specific safeguards shall be “in perpetuity”, allowing for no suspension of international safeguards and shutting out room for corrective measures.

Clause 29, however, raises the question whether India, faced with a fuel cut-off, will have the right to withdraw from safeguards the eight indigenous power reactors it is opening to outside inspection. According to papers published by two legal experts on GOV/1621, Antonio F. Perez and Laura Rockwood, the answer may be yes, if India first removes, to IAEA’s satisfaction, supplied fissionable material used or processed in those reactors.

■ India will not only open its entire civil programme to external safeguards, but also help pay for such inspections. India additionally has agreed to protect the Agency and its inspectors against “third-party liability, including any insurance or other financial security, in respect of a nuclear incident”, even though the IAEA is to vet the design of new facilities.

The accord lays out the cost of inspection of each Indian facility at 1.2 million euro annually. India is to place more than two dozen facilities under safeguards in a phased manner. Without making clear what will be New Delhi’s share, Clause 101 says: “India and the Agency shall each bear any expense incurred in the implementation of their responsibilities under this agreement”. But with the Hyde Act mandating “fallback US safeguards” in case “budget or personnel strains in the IAEA” render it “unable” to fully enforce inspections, India may be compelled to pick up most of the IAEA expenses to avoid parallel US inspections.

The costs of IAEA inspections will be high because, under the accord, India has agreed to be subject to rigorous safeguards, not the token inspections the Agency carries out in nuclear-weapons states.

India indeed has granted the IAEA the right to carry out “special inspections” at will. While civil nuclear research institutions bereft of atomic material will escape inspection, commercial power reactors, reprocessing and other facilities with an annual throughput of more than 60 kilograms of nuclear material are to be subject to “continuous inspection”, with the IAEA having the right of access at all times. The Agency, however, has agreed to implement the accord in a manner not to hamper “India’s economic or technological development, and not to hinder or otherwise interfere with any activities involving the use by India of nuclear material, non-nuclear material, equipment, components, information or technology produced, acquired or developed by India independent of this agreement for its own purposes”.

Contrast the accord’s provisions with Dr. Singh’s solemn assurances to Parliament on several occasions. For example, speaking in Parliament on March 7, 2006, the PM had given the following assurance: “In essence, an India-specific safeguards would … permit India to take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies. Taking this into account, India will place its civilian nuclear facilities under India-specific safeguards in perpetuity and negotiate an appropriate safeguards agreement to this end with the IAEA”.

The deal has progressively picked up such tougher conditions that today few remember that the July 18, 2005, agreement-in-principle had promised India “the same benefits and advantages” as the US. What is on offer now is restricted cooperation tied to intrusive conditions, to the extent that the G-8, in its chair’s summary this week, put the focus on advancing “India’s non-proliferation commitments and progress so as to facilitate a more robust approach to civil nuclear cooperation…” The deal is the means to tether India to the non-proliferation regime.

The India-IAEA safeguards accord compounds the mistakes Indian diplomacy made on the civil-military separation plan and the 123 agreement. Its operative parts mirror the clauses found in the IAEA agreements with non-nuclear-weapons states.

Official Text of India-IAEA Safeguards Agreement Part I

Posted on July 10, 2008 by Chellaney

GOV/2008/30

Date: 9 July 2008

Restricted Distribution

Original: English

For official use only

Nuclear Verification

The Conclusion of Safeguards Agreements and Additional Protocols

An Agreement with the Government of India for the Application of

Safeguards to Civilian Nuclear Facilities

Recommended Action

• It is recommended that the Board authorize the Director General to conclude with the

Government of India, and subsequently implement, the draft Safeguards Agreement reproduced in the Attachment hereto.

GOV/2008/30

Nuclear Verification

The Conclusion of Safeguards Agreements and

Additional Protocols

An Agreement with the Government of India for the Application of

Safeguards to Civilian Nuclear Facilities

1. Referring to its desire to expand civil nuclear cooperation with other Member States of the Agency and to the relevance in this context of the understanding between India and the United States of America expressed in the India-U.S. Joint Statement of 18 July 2005, the Government of India requested the Agency to conclude with it an agreement for the application of safeguards with respect to its civilian nuclear facilities.

2. A draft safeguards agreement was accordingly negotiated with India (attached) using the relevant guidance documents that have been adopted by the Board of Governors for the purposes of concluding INFCIRC/66-type safeguards agreements.

3. The draft agreement provides for the application of safeguards to facilities, nuclear material, nonnuclear material, equipment and components as set out in paragraph 11 of the agreement.

4. At the request of India the draft text includes provisions for the use of the agreement as an “umbrella agreement”. Paragraph 14 thereof provides that any facility notified by India to the Agency will become subject to safeguards under this agreement. Such facilities will be listed on the Annex to the agreement, which will be published, and updated, as India notifies the Agency of additional facilities. In addition, paragraph 22 provides for the possibility of safeguarding under the agreement items that are already subject to safeguards under other Safeguards Agreements concluded by India with the Agency, subject to agreement by the parties to such other Safeguards Agreements. As a consequence, the application of safeguards under those Safeguards Agreements would be suspended for so long as this agreement remains in force.

5. Paragraph 99 provides that India shall take all suitable measures for the physical protection of facilities and nuclear material subject to the agreement, taking into account the recommendations made in INFCIRC/225/Rev.4, as may be amended from time to time.

6. In paragraph 100 of the draft agreement India undertakes to establish and maintain a system of accounting for and control of all items subject to safeguards under the agreement, in accordance with provisions to be set out in the Subsidiary Arrangements.

7. It will be also noted that the draft agreement includes an undertaking by India and the Agency that in the event that India decides to offer an enrichment plant in the future as a facility subject to the agreement, India and the Agency shall consult and agree on the application of the Agency’s safeguards procedures before any such facility is subject to the agreement (paragraph 86).

8. When safeguards are applied to new facilities under this agreement, the Agency will incur additional expenses. On the assumption that 2009 will be the first year that the Agency will start implementing this agreement at new facilities, a supplementary appropriation to the regular budget will be requested as agreed by the Board of Governors at its 9 July 2007 session. The estimated cost for the first year for one new facility would be in the order of € 1.2 million.

GOV/2008/30

DRAFT

AGREEMENT BETWEEN THE GOVERNMENT OF INDIA

AND THE INTERNATIONAL ATOMIC ENERGY AGENCY

FOR THE APPLICATION OF SAFEGUARDS TO CIVILIAN

NUCLEAR FACILITIES

RECOGNIZING the significance India attaches to civilian nuclear energy as an efficient, clean and sustainable energy source for meeting global energy demand, in particular for meeting India’s growing energy needs;

WHEREAS India is committed to the full development of its national three-stage nuclear programme to meet the twin challenges of energy security and protection of the environment;

WHEREAS India has a sovereign and inalienable right to carry out nuclear research and development activities for the welfare of its people and other peaceful purposes;

WHEREAS India, a State with advanced nuclear technology, wishes to expand civil nuclear cooperation for its national development;

WHEREAS India is desirous of further expanding cooperation with the International Atomic Energy Agency (hereinafter referred to as “the Agency”) and its Member States with the objective of the full development and use of nuclear energy for peaceful purposes, on a stable, reliable and predictable basis;

WHEREAS India supports the role of the Agency in the promotion of the safe and peaceful uses of nuclear energy as set forth in the Statute of the Agency (hereinafter referred to as the “Statute”);

WHEREAS India and the Agency have long standing cooperation in various aspects of the Agency’s activities;

RECOGNIZING that such cooperation between India and the Agency must be carried out with full respect for the objectives of the Statute and with due observance of the sovereign rights of India;

WHEREAS the Statute authorizes the Agency to apply safeguards, at the request of the parties, to any bilateral or multilateral arrangement, or at the request of a State to any of the State’s activities in the field of atomic energy and, in this context:

Noting the relevance for this Agreement of the understandings between India and the United States of America expressed in the India-U.S. Joint Statement of 18 July 2005, in which India, inter alia, has stated its willingness:

• to identify and separate its civilian and military nuclear facilities and programmes in a phased manner;

• to file with the Agency a declaration regarding its civilian nuclear facilities (hereinafter referred to as “the Declaration”);

• to take a decision to place voluntarily its civilian nuclear facilities under Agency safeguards;

Noting also for the purposes of this Agreement that:

• India will place its civilian nuclear facilities under Agency safeguards so as to facilitate full civil nuclear cooperation between India and Member States of theAgency and to provide assurance against withdrawal of safeguarded nuclear material from civilian use at any time;

• An essential basis of India’s concurrence to accept Agency safeguards under an India-specific safeguards agreement (hereinafter referred to as “this Agreement”) is the conclusion of international cooperation arrangements creating the necessary conditions for India to obtain access to the international fuel market, including reliable, uninterrupted and continuous access to fuel supplies from companies in several nations, as well as support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply over the lifetime of India’s reactors; and

• India may take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies;

WHEREAS India is desirous of expanding civil nuclear cooperation with other Member States of the Agency;

WHEREAS the conclusion of this Agreement is intended to facilitate the broadest possible cooperation between India and Member States of the Agency in the peaceful uses of nuclear energy and ensure international participation in the further development of India’s civilian nuclear programme on a sustained and long–term basis;

RECALLING that the Agency in accordance with its Statute and safeguards system must take into account, in the implementation of safeguards in India, the need to avoid hampering the peaceful uses of nuclear energy, economic and technological development or international cooperation in the field of peaceful uses of nuclear energy; respect health, safety and physical protection and related security provisions in force in India; and take every precaution to protect commercial, technological and industrial secrets as well as other confidential information coming to its knowledge;

WHEREAS the frequency and intensity of activities described in this Agreement shall be kept to the minimum consistent with the objective of effective and efficient Agency safeguards;

WHEREAS India has requested the Agency to apply safeguards with respect to items subject to this Agreement;

WHEREAS the Board of Governors of the Agency (hereinafter referred to as the "Board") acceded to that request on …………;

NOW THEREFORE, taking into account the above, India and the Agency have agreed as follows:

I. GENERAL CONSIDERATIONS

A. BASIC UNDERTAKINGS

1. India undertakes that none of the items subject to this Agreement, as defined in paragraph 11, shall be used for the manufacture of any nuclear weapon or to further any other military purpose and that such items shall be used exclusively for peaceful purposes and shall not be used for the manufacture of any nuclear explosive device.

2. The Agency undertakes to apply safeguards, in accordance with the terms of this Agreement, to the items subject to this Agreement, as defined in paragraph 11, so as to ensure, as far as it is able, that no such item is used for the manufacture of any nuclear weapon or to further any other military purpose and that such items are used exclusively for peaceful purposes and not for the manufacture of any nuclear explosive device.

B. GENERAL PRINCIPLES

3. The purpose of safeguards under this Agreement is to guard against withdrawal of safeguarded nuclear material from civilian use at any time.

4. The application of safeguards under this Agreement is intended to facilitate implementation of relevant bilateral or multilateral arrangements to which India is a party, which are essential to the accomplishment of the objective of this Agreement.

5. Bearing in mind Article II of the Statute, the Agency shall implement safeguards in a manner designed to avoid hampering India’s economic or technological development, and not to hinder or otherwise interfere with any activities involving the use by India of nuclear material, non-nuclear material, equipment, components, information or technology produced, acquired or developed by India independent of this Agreement for its own purposes.

6. The safeguards procedures set forth in this document shall be implemented in a manner designed to be consistent with prudent management practices required for the economic and safe conduct of nuclear activities.

7. In implementing safeguards, the Agency shall take every precaution to protect commercial and industrial secrets. No member of the Agency’s staff shall disclose, except to the Director General and to such other members of the staff as the Director General may authorize to have such information by reason of their official duties in connection with safeguards, any commercial or industrial secret or any other confidential information coming to his knowledge by reason of the implementation of safeguards by the Agency.

8. The Agency shall not publish or communicate to any State, organization or person any information obtained by it in connection with the implementation of safeguards in India, except that:

(a) Specific information relating to such implementation in India may be given to the Board and to such Agency staff members as require such knowledge by reason of their official duties in connection with safeguards, but only to the extent necessary for the Agency to fulfil its safeguards responsibilities;

(b) Summarized lists of items being safeguarded by the Agency may be published upon decision of the Board; and

9. In the light of Article XII.A.5 of the Statute, safeguards shall continue with respect to produced special fissionable material and to any materials substituted therefor.

10. Nothing in this Agreement shall affect other rights and obligations of India under international law.

II. CIRCUMSTANCES REQUIRING SAFEGUARDS

A. ITEMS SUBJECT TO THIS AGREEMENT

11. The items subject to this Agreement shall be:

(a) Any facility listed in the Annex to this Agreement, as notified by India pursuant to

paragraph 14(a) of this Agreement;

(b) Any nuclear material, non-nuclear material, equipment and components supplied to India which are required to be safeguarded pursuant to a bilateral or multilateral arrangement to which India is a party;

(c) Any nuclear material, including subsequent generations of special fissionable material, produced, processed or used in or by the use of a facility listed in the Annex or in or by the use of any nuclear material, non-nuclear material, equipment and components referred to in paragraph 11(b);

(d) Any nuclear material substituted in accordance with paragraph 27 or 30(d) of this Agreement for nuclear material referred to in paragraph 11(b) or 11(c) of this Agreement;

(e) Any heavy water substituted in accordance with paragraph 32 of this Agreement for heavy water subject to this Agreement;

(f) Any facility other than a facility identified in paragraph 11(a) above, or any other location in India, while producing, processing, using, fabricating or storing any nuclear material, non-nuclear material, equipment or components referred to in paragraph 11(b), (c), (d) or (e) of this Agreement, as notified by India pursuant to paragraph 14(b) of this Agreement.

12. The scope of this Agreement is limited to the items subject to this Agreement as defined in paragraph 11 above.

Declaration

13. Upon entry into force of this Agreement, and a determination by India that all conditions conducive to the accomplishment of the objective of this Agreement are in place, India shall file with the Agency a Declaration, based on its sovereign decision to place voluntarily its civilian nuclear facilities under Agency safeguards in a phased manner.

Notifications

14.

(a) India, on the basis of its sole determination, shall notify the Agency in writing of its decision to offer for Agency safeguards a facility identified by India in the Declaration referred to in paragraph 13, or any other facility to be determined by India. Any facility so notified by India to the Agency will be included in the Annex, and become subject to this Agreement, as of the date of receipt by the Agency of such written notification from India.

(b) Should India, on the basis of its sole determination, decide to import or transfer any nuclear material, non-nuclear material, equipment or components subject to this Agreement to any facility or other location in India provided for in paragraph 11(f) of this Agreement, it shall so notify the Agency. Any such facility or location so notified by India pursuant to this sub-paragraph shall become subject to this Agreement as of the date of receipt by the Agency of such written notification from India.

15. India shall notify the Agency of the receipt of any nuclear material, non-nuclear material, equipment and components referred to in paragraph 11(b) of this Agreement within four weeks of the arrival in India of such nuclear material, non-nuclear material, equipment and components.

Provision of Information to the Agency

16. In the event that India’s notification pursuant to paragraph 14(a) of this Agreement relates to a facility subject to Agency safeguards under another Safeguards Agreement or Agreements in India at the time of entry into force of this Agreement, India shall provide the Agency, along with the relevant notification, such information as is required pursuant to the other Safeguards Agreement or Agreements as relates to any nuclear material, non-nuclear material, equipment and components subject to safeguards thereunder.

17. With respect to any other facility listed in the Annex pursuant to paragraph 14(a) of this Agreement, India shall provide the Agency, within four weeks of the relevant notification, with:

(a) a list of all nuclear material at each such facility; and

(b) where relevant, and if required pursuant to a bilateral or multilateral arrangement to which India is party, information relating to:

(i) Any nuclear material, non-nuclear material, equipment and components supplied to India for production , processing, storage or use in such facility;

(ii) Any nuclear material, including subsequent generations of special fissionable material, produced, processed or used in or by the use of such facility or in or by the use of any nuclear material, non-nuclear material, equipment and components supplied to India for production, processing or use in such facility.

18. Each notification pursuant to paragraph 15 of the Agreement shall include all information relevant to the nuclear material, non-nuclear material, equipment and components so notified, including the facility or location where the nuclear material, non-nuclear material, equipment and components so notified will be received.

19. The information provided by India pursuant to paragraphs 16, 17 and 18 of this Agreement shall specify, inter alia, to the extent relevant, the nuclear and chemical composition, physical form and quantity of the nuclear material; the date of shipment; the date of receipt; the identity of the consigner and the consignee; and any other relevant information, such as the type and capacity of any facility (or parts thereof), components or equipment; and the type and quantity of non-nuclear material. In the case of a facility or other location subject to this Agreement, the information to be provided shall include the type and capacity of that facility or location, and any other relevant information.

20. India shall thereafter notify the Agency by means of reports, in accordance with this Agreement, of any nuclear material, non-nuclear material, equipment and components referred to in paragraph 11(b), (c), (d) or (e) of this Agreement. The Agency may verify the calculations of the amounts and/or quantities of such nuclear material, non-nuclear material, equipment and components, and appropriate adjustments shall be made by agreement between India and the Agency.

21. The Agency shall maintain an inventory of items subject to this Agreement. The Agency shall send a copy of the inventory it maintains with respect to such information to India every twelve months and also at any other times specified by India in a request communicated to the Agency at least two weeks in advance.

B. SAFEGUARDS UNDER OTHER AGREEMENTS

22. The application of Agency safeguards under other Safeguards Agreements concluded by India with the Agency and in force at the time of entry into force of this Agreement may, subject to agreement by the Parties to such other Safeguards Agreements and following notification by India of the relevant facilities pursuant to paragraph 14(a), be suspended while this Agreement is in force. The application of safeguards under this Agreement to nuclear material, non-nuclear material, equipment or components subject to safeguards under such other Agreements shall commence as of the date of receipt by the Agency of India’s notification. India’s undertaking not

to use items subject thereto in such a way as to further any military purpose, and its undertaking that such items shall be used exclusively for peaceful purposes and shall not be used for the manufacture of any nuclear explosive device, shall continue to apply.

C. EXEMPTIONS FROM SAFEGUARDS

General Exemptions

23. Nuclear material that would otherwise be subject to safeguards shall be exempted from safeguards at the request of India, provided that the material so exempted in India may not at any time exceed:

(a) 1 kilogram in total of special fissionable material, which may consist of one or more of the following:

(i) Plutonium;

(ii) Uranium with an enrichment of 0.2 (20 %) and above, taken account of by multiplying its weight by its enrichment;

(iii) Uranium with an enrichment below 0.2 (20 %) and above that of natural uranium, taken account of by multiplying its weight by five times the square of its enrichment;

(b) 10 metric tons in total of natural uranium and depleted uranium with an enrichment above 0.005 (0.5 %);

(d) 20 metric tons of thorium.

Exemptions Related to Reactors

24. Produced or used nuclear material that would otherwise be subject to safeguards because it is being or has been produced, processed or used in a reactor which has been supplied wholly or substantially under a project agreement, submitted to safeguards under a safeguards agreement by the parties to a bilateral or multilateral arrangement or unilaterally submitted to safeguards under a safeguards agreement; or because it is being or has been produced in or by the use of safeguarded nuclear material, shall be exempted from safeguards if:

(a) It is plutonium produced in the fuel of a reactor whose rate of production does not exceed 100 grams of plutonium per year; or

(b) It is produced in a reactor determined by the Agency to have a maximum calculated power for continuous operation of less than 3 thermal megawatts, or is used in such a reactor and would not be subject to safeguards except for such use, provided that the total power of the reactors with respect to which these exemptions apply in any State may not exceed 6 thermal megawatts.

25. Produced special fissionable material that would otherwise be subject to safeguards only because it has been produced in or by the use of safeguarded nuclear material shall in part be exempted from safeguards if it is produced in a reactor in which the ratio of fissionable isotopes within safeguarded nuclear material to all fissionable isotopes is less than 0.3 (calculated each time any change is made in the loading of the reactor and assumed to be maintained until the next such change). Such fraction of the produced material as corresponds to the calculated ratio shall be subject to safeguards.

D. SUSPENSION OF SAFEGUARDS

26. Safeguards with respect to nuclear material may be suspended while the material is transferred, under an arrangement or agreement approved by the Agency, for the purpose of processing, reprocessing, testing, research or development, within India or to any other Member State or to an international organization, provided that the quantities of nuclear material with respect to which safeguards are thus suspended in India may not at any time exceed:

(a) 1 effective kilogram of special fissionable material;

(b) 10 metric tons in total of natural uranium and depleted uranium with an enrichment 0.005 (0.5 %);

(d) 20 metric tons of thorium.

27. Safeguards with respect to nuclear material in irradiated fuel which is transferred for the purpose of reprocessing may also be suspended if the State or States concerned have, with the agreement of the Agency, placed under safeguards substitute nuclear material in accordance with paragraph 30(d) of this Agreement for the period of suspension. In addition, safeguards with respect to plutonium contained in irradiated fuel which is transferred for the purpose of reprocessing may be suspended for a period not to exceed six months if the State or States concerned have, with the agreement of the Agency, placed under safeguards a quantity of uranium whose enrichment in the

isotope uranium-235 is not less than 0.9 (90%) and the uranium-235 content of which is equal in weight to such plutonium. Upon expiration of the said six months or the completion of reprocessing, whichever is earlier, safeguards shall, with the agreement of the Agency, be applied to such plutonium and shall cease to apply to the uranium substituted therefor.

28. Under conditions specified in the Subsidiary Arrangements, the Agency shall suspend safeguards with respect to any parts of the facilities listed in the Annex which are removed for maintenance or repair.

E. TERMINATION OF SAFEGUARDS

29. The termination of safeguards on items subject to this Agreement shall be implemented taking into account the provisions of GOV/1621 (20 August 1973).

30. Nuclear material shall no longer be subject to safeguards under this Agreement after:

(a) It has been returned to the State that originally supplied it (whether directly or through the Agency), if it was subject to safeguards only by reason of such supply and if:

(i) It was not improved while under safeguards; or

(ii) Any special fissionable material that was produced in it under safeguards has been

separated out, or safeguards with respect to such produced material have been terminated; or

(b) The Agency has determined that:

(i) It was subject to safeguards only by reason of its use in a principal nuclear facility which has been supplied wholly or substantially under a project agreement, submitted to

safeguards under a safeguards agreement by the parties to a bilateral or multilateral

arrangement or unilaterally submitted to safeguards under a safeguards agreement;

(ii) It has been removed from such a facility; and

(iii) Any special fissionable material that was produced in it under safeguards has been

separated out, or safeguards with respect to such produced material have been terminated; or

(c) The Agency has determined that it has been consumed, or has been diluted in such a way that it is no longer usable for any nuclear activity relevant from the point of view of safeguards, or has become practicably irrecoverable; or

(d) India has, with the agreement of the Agency, placed under safeguards, as a substitute, such amount of the same element, not otherwise subject to safeguards, as the Agency has determined contains fissionable isotopes:

(i) Whose weight (with due allowance for processing losses) is equal to or greater than the weight of the fissionable isotopes of the material with respect to which safeguards are to terminate; and

(ii) Whose ratio by weight to the total substituted element is similar to or greater than the

ratio by weight of the fissionable isotopes of the material with respect to which safeguards are to terminate to the total weight of such material; provided that the Agency may agree to the substitution of plutonium for uranium-235 contained in uranium whose enrichment is not greater than 0.05 (5.0 %); or

(e) It has been transferred out of India under paragraph 33(d) of this Agreement, provided that such material shall again be subject to safeguards if it is returned to India; or

(f) The terms of this Agreement, pursuant to which it was subject to safeguards under this Agreement, no longer apply, by expiration of this Agreement or otherwise.

31. If India wishes to use safeguarded source material for non-nuclear purposes, such as the production of alloys or ceramics, it shall agree with the Agency on the circumstances under which the safeguards on such material may be terminated.

32. Safeguards shall be terminated on a facility listed in the Annex after India and the Agency have jointly determined that the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards. Safeguards on non-nuclear material, equipment and components subject to this Agreement may be terminated as and when the non-nuclear material, equipment or components have been returned to the supplier or arrangements have been made by the Agency to safeguard the non-nuclear material, equipment or components in the State to which it is being transferred, or when India and the Agency have jointly determined that the non-nuclear material, equipment or component in question has been consumed, is no longer usable for any nuclear

activity relevant from the point of view of safeguards or has become practicably irrecoverable. Safeguards may be terminated on heavy water upon India’s placing under safeguards as substitute the same amount of heavy water of equivalent or better heavy water concentration.

F. TRANSFERS

33. No safeguarded nuclear material shall be transferred outside the jurisdiction of India until the Agency has satisfied itself that one or more of the following conditions apply:

(a) The material is being returned, under the conditions specified in paragraph 30(a) of this Agreement, to the State that originally supplied it; or

(b) The material is being transferred subject to the provisions of paragraph 26 or 27 of this Agreement; or

(c) Arrangements have been made by the Agency to safeguard the material in the State to which it is being transferred; or

(d) The material was not subject to safeguards pursuant to a project agreement and will be subject, in the State to which it is being transferred, to safeguards other than those of the Agency but generally consistent with such safeguards and accepted by the Agency.

34. India shall notify the Agency of its intention to transfer within its jurisdiction any nuclear material, non-nuclear material, equipment or component subject to this Agreement to any facility or location in India to which paragraph 11(f) applies and shall provide to the Agency, before such transfer is effected, the necessary information to enable the Agency to make arrangements for the application of safeguards to such nuclear material, non-nuclear material, equipment or component after its transfer. The Agency shall also be given the opportunity as early as possible in advance of such a transfer to review the design of the facility for the sole purpose of determining that the

arrangements provided for in this Agreement can be effectively applied. India may transfer the nuclear material, non-nuclear material, equipment or component only after the Agency has confirmed that it has made such arrangements.

35. India shall notify the Agency of its intention to transfer any nuclear material, non-nuclear material, equipment or component subject to this Agreement to a recipient which is not under the jurisdiction of India. Except as provided for in paragraph 30(a) of this Agreement, such nuclear material, non-nuclear material, equipment or component shall be so transferred only after the Agency has informed India that it has satisfied itself that Agency safeguards will apply with respect to the nuclear material, non-nuclear material, equipment or component in the recipient country. Upon receipt by the Agency of the notification of transfer from India and the confirmation of receipt by the recipient country, safeguards on such nuclear material, non-nuclear material, equipment or component shall be terminated under this Agreement.

36. The notifications referred to in paragraphs 34 and 35 of this Agreement shall be made to the Agency sufficiently in advance to enable it to make the arrangements required before the transfer is effected. The Agency shall promptly take any necessary action. The time limits for and the contents of these notifications shall be set out in the Subsidiary Arrangements.

III. SAFEGUARDS PROCEDURES

A. GENERAL PROCEDURES

Introduction

37. The safeguards procedures to be applied by the Agency are those specified in this Agreement, as well as such additional procedures as result from technological developments, and other procedures as may be agreed to between the Agency and India. The safeguards procedures set forth below shall be followed, as far as relevant, with respect to any item subject to this Agreement.

38. The Agency shall conclude with India Subsidiary Arrangements concerning the implementation of the safeguards procedures referred to above. The Subsidiary Arrangements shall also include any necessary arrangements for the application of safeguards to any item subject to this Agreement, including such containment and surveillance measures as are required for the effective implementation of safeguards. The Subsidiary Arrangements shall enter into force no later than six months after entry into force of this Agreement.

Design Review

39. The Agency shall review the design of principal nuclear facilities, for the sole purpose of satisfying itself that a facility will permit the effective application of safeguards.

40. The design review of a principal nuclear facility shall take place at as early a stage as possible. In particular, such review shall be carried out in the case of:

(a) An Agency project, before the project is approved;

(b) A bilateral or multilateral arrangement under which the responsibility for administering

safeguards is to be transferred to the Agency, or an activity or facility unilaterally submitted by India, before the Agency assumes safeguards responsibilities with respect to the facility;

(c) A transfer of safeguarded nuclear material to a principal nuclear facility whose design has not previously been reviewed, before such transfer takes place; and

(d) A significant modification of a principal nuclear facility whose design has previously been reviewed, before such modification is undertaken.

41. To enable the Agency to perform the required design review, India shall submit to it relevant design information sufficient for the purpose, including information on such basic characteristics of the principal nuclear facility as may bear on the Agency’s safeguards procedures. The Agency shall require only the minimum amount of information and data consistent with carrying out its responsibility under this section. It shall complete the review promptly after the submission of this information by India and shall notify the latter of its conclusions without delay.

42. If the Agency wishes to examine design information which India regards as sensitive, the Agency shall, if India so requests, conduct the examination on premises in India. Such information should not be physically transmitted to the Agency provided that it remains readily available for examination by the Agency in India.

Records

43. India shall arrange for the keeping of records with respect to principal nuclear facilities and also with respect to all safeguarded nuclear material outside such facilities. For this purpose India and the Agency shall agree on a system of records with respect to each facility and also with respect to such material, on the basis of proposals to be submitted by India in sufficient time to allow the Agency to review them before the records need to be kept.

44. All records shall be kept in English.

45. The records shall consist, as appropriate, of:

(a) Accounting records of all safeguarded nuclear material; and

(b) Operating records for principal nuclear facilities.

46. All records shall be retained for at least two years.

Reports

General Requirements

47. India shall submit to the Agency reports with respect to the production, processing and use of safeguarded nuclear material in or outside principal nuclear facilities. For this purpose, India and the Agency shall agree on a system of reports with respect to each facility and also with respect to safeguarded nuclear material outside such facilities, on the basis of proposals to be submitted by India in sufficient time to allow the Agency to review them before the reports need to be submitted. The reports need include only such information as is relevant for the purpose of safeguards.

48. All reports shall be submitted in English.

Routine Reports

49. Routine reports shall be based on the records compiled in accordance with paragraphs 43 to 46 of this Agreement and shall consist, as appropriate, of:

(a) Accounting reports showing the receipt, transfer out, inventory and use of all safeguarded nuclear material. The inventory shall indicate the nuclear and chemical composition and physical form of all material and its location on the date of the report; and

(b) Operating reports showing the use that has been made of each principal nuclear facility since the last report and, as far as possible, the programme of future work in the period until the next routine report is expected to reach the Agency.

50. The first routine report shall be submitted as soon as:

(a) There is any safeguarded nuclear material to be accounted for; or

(b) The principal nuclear facility to which it relates is in a condition to operate.

Progress in Construction

51. The Agency may request information as to when particular stages in the construction of a principal nuclear facility have been or are to be reached.

Special Reports

52. India shall report to the Agency without delay:

(a) If any unusual incident occurs involving actual or potential loss or destruction of, or damage to, any safeguarded nuclear material or principal nuclear facility;

(b) If there is good reason to believe that safeguarded nuclear material is lost or unaccounted for in quantities that exceed the normal operating and handling losses that have been accepted by the Agency as characteristic of the facility; or

(c) Disruption of operation of facilities listed in the Annex on account of material violation or breach of bilateral or multilateral arrangements to which India is a party.

53. India shall report to the Agency, as soon as possible, and in any case within two weeks, any transfer not requiring advance notification that will result in a significant change (to be defined by the Agency in agreement with India) in the quantity of safeguarded nuclear material in a principal nuclear facility. Such report shall indicate the amount and nature of the material and its intended use.

Amplification of Reports

54. At the Agency’s request, India shall submit amplifications or clarifications of any report, in so far as relevant for the purpose of safeguards.

Official Text of India-IAEA Safeguards Agreement Part II

Posted on July 10, 2008 by Chellaney

Inspections

General Procedures

55. The Agency may inspect any items subject to this Agreement.

56. The purpose of safeguards inspections under this Agreement shall be to verify compliance by India with this Agreement and to assist India in complying with this Agreement and in resolving any questions arising out of the implementation of safeguards.

57. The number, duration and intensity of inspections actually carried out shall be kept to the minimum consistent with the effective implementation of safeguards, and if the Agency considers that the authorized inspections are not all required, fewer shall be carried out.

58. Inspectors shall neither operate any facility themselves nor direct the staff of a facility to carry out any particular operation.

Routine Inspections

59. Routine inspections may include, as appropriate:

(a) Audit of records and reports;

(b) Verification of the amount of safeguarded nuclear material by physical inspection, measurement and sampling;

(c) Examination of principal nuclear facilities, including a check of their measuring instruments and operating characteristics; and

(d) Check of the operations carried out at principal nuclear facilities.

60. Whenever the Agency has the right of access to a principal nuclear facility at all times, it may perform inspections of which notice as required by paragraph 4 of the Inspectors Document need not be given, in so far as this is necessary for the effective application of safeguards. The actual procedures to implement these provisions shall be agreed upon between India and the Agency.

Initial Inspections of a Principal Nuclear Facility

61. To verify that the construction of a principal nuclear facility is in accordance with the design reviewed by the Agency, an initial inspection or inspections of the facility may be carried out:

(a) As soon as possible after the facility has come under Agency safeguards, in the case of a facility already in operation; and

(b) Before the facility starts to operate, in other cases.

62. The measuring instruments and operating characteristics of the facility shall be reviewed to the extent necessary for the purpose of implementing safeguards. Instruments that will be used to obtain data on the nuclear materials in the facility may be tested to determine their satisfactory functioning. Such testing may include the observation by inspectors of commissioning or routine tests by the staff of the facility, but shall not hamper or delay the construction, commissioning or normal operation of the facility.

Special Inspections

63. The Agency may carry out special inspections if:

(a) The study of a report indicates that such inspection is desirable; or

(b) Any unforeseen circumstance requires immediate action.

The Board shall subsequently be informed of the reasons for and the results of each such inspection.

64. The Agency may also carry out special inspections of substantial amounts of safeguarded nuclear material that are to be transferred outside the jurisdiction of India, for which purpose India shall give the Agency sufficient advance notice of any such proposed transfer.

B. SPECIAL PROCEDURES FOR REACTORS

Reports

65. The frequency of submission of routine reports shall be agreed between the Agency and India, taking into account the frequency established for routine inspections. However, at least two such reports shall be submitted each year and in no case shall more than 12 such reports be required in any year.

Inspections

66. One of the initial inspections of a reactor shall if possible be made just before the reactor first reaches criticality.

67. The maximum frequency of routine inspections of a reactor and of the safeguarded nuclear material in it shall be determined from the following table:

____________________________________________________________________

Whichever is the largest of: Maximum number

(a) Facility inventory (including loading); of routine inspections

(b) Annual throughput; manually

(c) Maximum potential annual production of special

fissionable material

(Effective kilograms of nuclear material)

Up to 1 0

More than 1 and up to 5 1

More than 5 and up to 10 2

More than 10 and up to 15 3

More than 15 and up to 20 4

More than 20 and up to 25 5

More than 25 and up to 30 6

More than 30 and up to 35 7

More than 35 and up to 40 8

More than 40 and up to 45 9

More than 45 and up to 50 10

More than 50 and up to 55 11

More than 55 and up to 60 12

More than 60 Right of access at all times

68. The actual frequency of inspection of a reactor shall take account of:

(a) The fact that India possesses irradiated fuel reprocessing facilities:

(b) The nature of the reactor; and

C. SPECIAL PROCEDURES RELATING TO SAFEGUARDED NUCLEAR

MATERIAL OUTSIDE PRINCIPAL NUCLEAR FACILITIES

Nuclear Material in Research and Development Facilities

Routine Reports

69. Only accounting reports need be submitted in respect of nuclear material in research and development facilities. The frequency of submission of such routine reports shall be agreed between the Agency and India, taking into account the frequency established for routine inspections; however, at least one such report shall be submitted each year and in no case shall more than 12 such reports be required in any year.

Routine Inspections

70. The maximum frequency of routine inspections of safeguarded nuclear material in a research and development facility shall be that specified in the table in paragraph 67 of this Agreement for the total amount of material in the facility.

Source Material in Sealed Storage

71. The following simplified procedures for safeguarding stockpiled source material shall be applied if India undertakes to store such material in a sealed storage facility and not to remove it therefrom without previously informing the Agency.

Design of Storage Facilities

72. India shall submit to the Agency information on the design of each sealed storage facility and agree with the Agency on the method and procedure for sealing it.

Routine Reports

73. Two routine accounting reports in respect of source material in sealed storage shall be submitted each year.

Routine Inspections

74. The Agency may perform one routine inspection of each sealed storage facility annually.

Removal of Material

75. India may remove safeguarded source material from a sealed storage facility after informing the Agency of the amount, type and intended use of the material to be removed, and providing sufficient other data in time to enable the Agency to continue safeguarding the material after it has been removed.

Nuclear Material in Other Locations

76. Except to the extent that safeguarded nuclear material outside of principal nuclear facilities is covered by any of the provisions set forth in paragraphs 69 to 75 of this Agreement, the following procedures shall be applied with respect to such material (for example, source material stored elsewhere than in a sealed storage facility, or special fissionable material used in a sealed neutron source in the field).

Routine Reports

77. Routine accounting reports in respect of all safeguarded nuclear material in this category shall be submitted periodically. The frequency of submission of such reports shall be agreed between the Agency and India, taking into account the frequency established for routine inspections; however, at least one such report shall be submitted each year and in no case shall more than 12 such reports be required in any year.

Routine Inspections

78. The maximum frequency of routine inspections of safeguarded nuclear material in this category shall be one inspection annually if the total amount of such material does not exceed five effective kilograms, and shall be determined from the table in paragraph 67 of this Agreement if the amount is greater.

D. PROVISIONS FOR REPROCESSING PLANTS

Introduction

79. Additional procedures applicable to the safeguarding of reprocessing plants are set out below.

Special Procedures

Reports

80. The frequency of submission of routine reports shall be once each calendar month.

Inspections

81. A reprocessing plant having an annual throughput not exceeding 5 effective kilograms of nuclear material, and the safeguarded nuclear material in it, may be routinely inspected twice a year. A reprocessing plant, having an annual throughput exceeding 5 effective kilograms of nuclear material, and the safeguarded nuclear material in it, may be inspected at all times. The arrangements for inspections set forth in paragraph 60 of this Agreement shall apply to all inspections to be made under this paragraph. It is understood that for plants having an annual throughput of more than 60 effective kilograms, the right of access at all times would be normally be implemented by means of continuous inspection.

82. When a reprocessing plant is under Agency safeguards only because it contains safeguarded nuclear material, the inspection frequency shall be based on the rate of delivery of safeguarded nuclear material.

83. India and the Agency shall cooperate in making all the necessary arrangements to facilitate the taking, shipping or analysis of samples, due account being taken of the limitations imposed by the characteristics of a plant already in operation when placed under Agency safeguards.

Mixtures of Safeguarded and Unsafeguarded Nuclear Material

84. India and the Agency may agree on the following special arrangements in the case of a reprocessing plant which has not been supplied wholly or substantially under a project agreement, submitted to safeguards under a safeguards agreement by the parties to a bilateral or multilateral arrangement or unilaterally submitted to safeguards under a safeguards agreement, and in which safeguarded and unsafeguarded nuclear materials are present:

(a) Subject to the provisions of sub-paragraph (b) below, the Agency shall restrict its safeguards procedures to the area in which irradiated fuel is stored, until such time as all or any part of such fuel is transferred out of the storage area into other parts of the plant. Safeguards procedures shall cease to apply to the storage area or plant when either contains no safeguarded nuclear material; and

(b) Where possible, safeguarded nuclear material shall be measured and sampled separately from unsafeguarded material, and at as early a stage as possible. Where separate measurement, sampling or processing are not possible, the whole of the material being processed in that campaign shall be subject to the safeguards procedures set out in Part III.D of this Agreement. At the conclusion of the processing the nuclear material that is thereafter to be safeguarded shall be selected by agreement between India and the Agency from the whole output of the plant resulting from that campaign, due account being taken of any processing losses accepted by the Agency.

E. PROVISIONS FOR CONVERSION PLANTS, ENRICHMENT PLANTS AND

FABRICATION PLANTS

Introduction

85. Additional procedures applicable to conversion plants and fabrication plants are set out below. This terminology is synonymous with the term “a plant for processing or fabricating nuclear material (excepting a mine or ore-processing plant)” which is used in paragraph 117 of this Agreement.

86. In the event that India decides to offer an enrichment plant in the future as a facility subject to this Agreement, the Agency and India shall consult and agree on the application of the Agency’s safeguards procedures for enrichment plants before any such facility is added to the Annex.

Special Procedures

Reports

87. The frequency of submission of routine reports shall be once each calendar month.

Inspections

88. A conversion plant or a fabrication plant which has been supplied wholly or substantially under a project agreement, submitted to safeguards under a safeguards agreement by the parties to a bilateral or multilateral arrangement, or unilaterally submitted to safeguards under a safeguards agreement, and the nuclear material in it, may be inspected at all times if the plant inventory at any time, or the annual input, of nuclear material exceeds five effective kilograms. Where neither the inventory at any time, nor the annual input, exceeds five effective kilograms of nuclear material, the routine inspections shall not exceed two a year. The arrangements for inspections set

forth in paragraph 57 of this Agreement shall apply to all inspections to be made under this paragraph. It is understood that, for plants having an inventory at any time, or an annual input, of more than 60 effective kilograms, the right of access at all times would normally be implemented by means of continuous inspection. Where neither the inventory at any time nor the annual input exceeds one effective kilogram of nuclear material, the plant would not normally be subject to routine inspection.

89. When a conversion plant or a fabrication plant which has not been supplied wholly or

substantially under a project agreement, submitted to safeguards under a safeguards agreement by the parties to a bilateral or multilateral arrangement or unilaterally submitted to safeguards under a safeguards agreement contains safeguarded nuclear material, the frequency of routine inspections shall be based on the inventory at any time and the annual input of safeguarded nuclear material. Where the inventory at any time, or the annual input, of safeguarded nuclear material exceeds five effective kilograms the plant may be inspected at all times. Where neither the inventory at any time, nor the annual input, exceeds five effective kilograms of safeguarded nuclear material, the routine inspections shall not exceed two a year. The arrangements for inspection set forth in paragraph 60 shall apply to all inspections to be made under this paragraph. It is understood that, for plants having an inventory at any time, or an annual input, of more than 60 effective kilograms, the right of access at all times would normally be implemented by means of continuous inspection. Where neither the inventory at any time nor the annual input exceeds one effective kilogram of nuclear material, the plant would not normally be subject to routine inspection.

90. The intensity of inspection of safeguarded nuclear material at various steps in a conversion plant or a fabrication plant shall take account of the nature, isotopic composition and amount of safeguarded nuclear material in the plant. Safeguards shall be applied in accordance with the general principles set forth in paragraphs 4 to 8 of this Agreement. Emphasis shall be placed on inspection to control uranium of high enrichments and plutonium.

91. Where a plant may handle safeguarded and unsafeguarded nuclear material, India shall notify the Agency in advance of the programme for handling safeguarded batches to enable the Agency to make inspections during these periods, due account being also taken of the arrangements under paragraph 92 of this Agreement.

92. India and the Agency shall cooperate in making all the necessary arrangements to facilitate the preparation of inventories of safeguarded nuclear material and the taking, shipping and/or analysis of samples, due account being taken of the limitations imposed by the characteristics of a plant already in operation when placed under Agency safeguards.

Residues, Scrap and Waste

93. India shall ensure that safeguarded nuclear material contained in residues, scrap or waste created during conversion or fabrication is recovered, as far as is practicable, in its facilities and within a reasonable period of time. If such recovery is not considered practicable by India, India and the Agency shall cooperate in making arrangements to account for and dispose of the material.

Safeguarded and Unsafeguarded Nuclear Material

94. India and the Agency may agree on the following special arrangements in the case of a conversion plant or a fabrication plant which has not been supplied wholly or substantially under a project agreement, submitted to safeguards under a safeguards agreement by the parties to a bilateral or multilateral arrangement or unilaterally submitted to safeguards under a safeguards agreement, and in which safeguarded and unsafeguarded nuclear material are both present:

(a) Subject to the provisions of sub-paragraph (b) below, the Agency shall restrict its safeguards procedures to the area in which safeguarded nuclear material is stored, until such time as all or any part of such nuclear material is transferred out of the storage area into other parts of the plant. Safeguards procedures shall cease to be applied to the storage area or plant when it contains no safeguarded nuclear material; and

(b) Where possible, safeguarded nuclear material shall be measured and sampled separately from unsafeguarded nuclear material, and at as early a stage as possible. Where separate measurement, sampling or processing is not possible, any nuclear material containing safeguarded nuclear material shall be subject to the safeguards procedures set out in Part III.E of this Agreement. At the conclusion of processing, the nuclear material that is thereafter to be safeguarded shall be selected, in accordance with paragraph 96 of this Agreement when applicable, by agreement between India and the Agency, due account being taken of any processing losses accepted by the Agency.

Blending of Nuclear Material

95. When safeguarded nuclear material is to be blended with either safeguarded or unsafeguarded nuclear material, India shall notify the Agency sufficiently in advance of the programme of blending to enable the Agency to exercise its right to obtain evidence, through inspection of the blending operation or otherwise, that the blending is performed according to the programme.

96. When safeguarded and unsafeguarded nuclear material are blended, if the ratio of fissionable isotopes in the safeguarded component going into the blend to all the fissionable isotopes in the blend is 0.3 or greater, and if the concentration of fissionable isotopes in the unsafeguarded nuclear material is increased by such blending, then the whole blend shall remain subject to safeguards. In other cases, the following procedures shall apply:

(a) Plutonium/plutonium blending: The quantity of the blend that shall continue to be

safeguarded shall be such that its weight, when multiplied by the square of the weight fraction of contained fissionable isotopes, is not less than the weight of originally safeguarded plutonium multiplied by the square of the weight fraction of fissionable isotopes therein, provided however that:

(i) In cases where the weight of the whole blend, when multiplied by the square of the

weight fraction of contained fissionable isotopes, is less than the weight of originally

safeguarded plutonium multiplied by the square of the weight fraction of fissionable

isotopes therein, the whole of the blend shall be safeguarded; and

(ii) The number of fissionable atoms in the portion of the blend that shall continue to be

under safeguards shall in no case be less than the number of fissionable atoms in the

originally safeguarded plutonium;

(b) Uranium/uranium blending: The quantity of the blend that shall continue to be safeguarded shall be such that the number of effective kilograms is not less than the number of effective kilograms in the originally safeguarded uranium, provided however that:

(i) In cases where the number of effective kilograms in the whole blend is less than in the

safeguarded uranium, the whole of the blend shall be safeguarded; and

(ii) The number of fissionable atoms in the portion of the blend that shall continue to be

under safeguards shall in no case be less than the number of fissionable atoms in the

originally safeguarded uranium;

(c) Uranium/plutonium blending: The whole of the resultant blend shall be safeguarded until the uranium and the plutonium constituents are separated. After separation of the uranium and plutonium, safeguards shall apply to the originally safeguarded component; and

(d) Due account shall be taken of any processing losses agreed upon between India and the Agency.

IV. AGENCY INSPECTORS

97. The provisions of paragraphs 1 to 10 and 12 to 14, inclusive, of the Inspectors Document shall apply to Agency inspectors performing functions pursuant to this Agreement. However, paragraph 4 of the Inspectors Document shall not apply with regard to any facility or to nuclear material to which the Agency has access at all times. The actual procedures to implement paragraph 60 of this Agreement shall be agreed to between the Agency and India.

98. The relevant provisions of the Agreement on the Privileges and Immunities of the Agency (INFCIRC/9/Rev.2) shall apply to the Agency, its inspectors performing functions under this Agreement and to any property of the Agency used by them in the performance of their functions under this Agreement.

V. PHYSICAL PROTECTION

99. India shall take all suitable measures necessary for the physical protection of the facilities and nuclear material subject to this Agreement, taking into account the recommendations made inAgency’s document INFCIRC/225/Rev.4, as may be amended from time to time.

VI. SYSTEM OF ACCOUNTING AND CONTROL

100. India shall establish and maintain a system of accounting for and control of all items subject to safeguards under this Agreement, in accordance with provisions to be set out in the Subsidiary Arrangements.

VII. FINANCE

101. India and the Agency shall each bear any expense incurred in the implementation of their responsibilities under this Agreement. The Agency shall reimburse India for any special expenses, including those referred to in paragraph 6 of the Inspectors Document, incurred by India or persons under its jurisdiction at the written request of the Agency, if India notified the Agency before the expense was incurred that reimbursement would be required. These provisions shall not prejudice the allocation of expenses attributable to a failure by either India or the Agency to comply with this Agreement.

102. India shall ensure that any protection against third party liability, including any insurance or other financial security, in respect of a nuclear incident occurring in a facility under its jurisdiction shall apply to the Agency and its inspectors when carrying out their functions under this Agreement as that protection applies to nationals of India.

VIII. NON-COMPLIANCE

103. If the Board determines in accordance with Article XII.C of the Statute of the Agency that there has been any non-compliance by India with this Agreement, the Board shall call upon India to remedy such non-compliance forthwith, and shall make such reports as it deems appropriate. In the event of failure by India to take full remedial action within a reasonable time, the Board may take any other measures provided for in Article XII.C of the Statute. The Agency shall promptly notify India in the event of any determination by the Board pursuant in this regard.

IX. COOPERATION, INTERPRETATION AND APPLICATION OF

THE AGREEMENT AND SETTLEMENT OF DISPUTES

104. The Agency and India shall cooperate to facilitate the implementation of this Agreement.

105. At the request of either India or the Agency, there shall be consultations about any question arising out of the interpretation or application of this Agreement. India and the Agency shall endeavour to settle by negotiation any dispute arising from the interpretation or application of this Agreement. India shall have the right to request that any question arising out of the interpretation or application of the Agreement be considered by the Board. The Board shall invite India to participate in the discussion of any such question by the Board.

106. In the event of any question or questions arising from the implementation of this Agreement, the Agency shall provide India with an opportunity to clarify and facilitate the resolution of such questions. The Agency shall not draw any conclusions in connection with the question or questions until India has had an opportunity to provide clarifications.

X. FINAL CLAUSES

107. India and the Agency shall, at the request of either of them, consult about amending this Agreement.

108. This Agreement shall enter into force on the date on which the Agency receives from India written notification that India’s statutory and/or constitutional requirements for entry into force have been met.

109. This Agreement shall remain in force until, in accordance with its provisions, safeguards have been terminated on all items subject to this Agreement, or until terminated by mutual agreement of the parties to this Agreement.

XI. DEFINITIONS

110. “Agency” means the International Atomic Energy Agency.

111. “Board” means the Board of Governors of the Agency.

112. “Campaign” means the period during which the chemical processing equipment in a

reprocessing plant is operated between two successive wash-outs of the nuclear material present in the equipment.

113. “Conversion plant” means a facility (excepting a mine or ore-processing plant) to improve unirradiated nuclear material, or irradiated nuclear material that has been separated from fission products, by changing its chemical or physical form so as to facilitate further use or processing. The term conversion plant includes the facility’s storage and analytical sections. The term does not include a plant intended for separating the isotopes of nuclear material.

114. “Director General” means the Director General of the Agency.

115. “Effective kilograms” means:

(i) In the case of plutonium, its weight in kilograms;

(ii) In the case of uranium with an enrichment of 0.01 (1 %) and above, its weight in kilograms multiplied by the square of its enrichment;

(iii) In the case of uranium with an enrichment below 0.01 (1 %) and above 0.005 (0.5 %), its weight in kilograms multiplied by 0.0001; and

(iv) In the case of depleted uranium with an enrichment of 0.005 (0.5 %) or below, and in the case of thorium, its weight in kilograms multiplied by 0.00005.

116. “Enrichment plant” means a plant for separating the isotopes of nuclear material.

117. “Facility” means, for the purposes of this Agreement:

(i) A “principal nuclear facility”, which means a reactor, a plant for processing nuclear material irradiated in a reactor, a plant for separating the isotopes of a nuclear material, a plant for processing or fabricating nuclear material (excepting a mine or ore-processing

plant) or a facility or plant of such other type as may be designated by the Board from

time to time, including associated storage facilities, as well as a critical facility or a

separate storage installation;

(ii) A research and development facility as defined in paragraph 127 of this Agreement;

(iii) Any location where nuclear material in amounts greater than one effective kilogram is customarily used;

(iv) A plant for the upgrading of heavy water or a separate storage installation for heavy water.

118. “Fabrication plant” means a plant to manufacture fuel elements or other components containing nuclear material and includes the plant’s storage and analytical sections.

119. “Improved” means, with respect to nuclear material, that either:

(i) The concentration of fissionable isotopes in it has been increased; or

(ii) The amount of chemically separable fissionable isotopes in it has been increased; or

(iii) Its chemical or physical form has been changed so as to facilitate further use or processing.

120. “Inspector” means an Agency official designated in accordance with the Inspectors Document.

121. “Inspectors Document” means the Annex to the Agency’s document GC(V)/INF/39.

122. “Nuclear material” means any source or special fissionable material as defined in Article XX of the Statute.

123. “Produced, processed or used” means any utilization or any alteration of the physical or chemical form or composition, including any change of the isotopic composition, of nuclear material;

124. “Project agreement” means a safeguards agreement relating to an Agency project and containing provisions as foreseen in Article XI.F.4.(b) of the Statute.

125. “Reactor” means any device in which a controlled, self-sustaining fission chain-reaction can be maintained.

126. “Reprocessing plant” means a facility to separate irradiated nuclear materials and fission products, and includes the facility’s head-end treatment section and its associated storage and analytical sections. This term is synonymous with the term “a plant for processing nuclear material irradiated in a reactor” which is used in paragraph 117 of this Agreement.

127. “Research and development facility” means a facility, other than a principal nuclear facility, used for research or development in the field of nuclear energy.

128. “Statute” means the Statute of the Agency.

129. “Throughput” means the rate at which nuclear material is introduced into a facility operating at full capacity.

130. “Unilaterally submitted” means submitted by India to Agency safeguards.

DONE at Vienna, on the day of 2008, in duplicate, in the English language.

For the GOVERNMENT OF INDIA: For the INTERNATIONAL ATOMIC ENERGY AGENCY

Pouring hot oil on nuclear power

Posted on July 4, 2008 by Chellaney

Too much hot air in nuke deal

The Indo-U.S. nuclear deal is largely about selling dreams, but a major myth propagated is that greater nuclear-generated electricity will help reduce India’s oil-import dependency, writes Brahma Chellaney

The Economic Times

July 4, 2008

The partisan rancour over the Indo-U.S. nuclear deal has helped obscure facts, allowing shibboleths and fantasies to substitute for an informed debate on a critical issue. Several myths continue to be repeated untiringly. The biggest of them draws a meretricious link between nuclear energy and soaring oil prices to justify the proposed import of high-priced, foreign fuel-dependent power reactors.

What does nuclear power have to do with the price or import requirements of any transportation fuel? Thanks to the oil price shocks in the 1970s and 1980s and the advent of new energy technologies, the share of global electricity produced from oil has shrunk from 25 per cent in 1973 to barely 4 per cent. The remaining oil-fired power plants — of which India has only a handful — will be phased out, or refitted to run on gas. Oil now is primarily used for transportation, while the reactor-import option is about electricity generation.

The link between nuclear power and oil is specious. In the years ahead, the world could move toward electric vehicles and even use grid power to make hydrogen for the fuel-cell vehicles of the future. In another futuristic scenario, nuclear energy may indirectly serve as a substitute to some oil use in the commercial and industrial sectors. But today, greater nuclear-generated electricity is not going to really reduce any country’s oil needs, certainly not India’s. In fact, with little overlap in the oil and nuclear global-market structures, nuclear power now competes principally against coal, natural gas and maybe renewables.

If global oil demand is threatening to outstrip supply, so is the case with uranium. Current concerns associated with oil’s price volatility, supply security and geopolitical risks are no different than uranium’s. And if global oil reserves are finite, so are uranium resources, with proven uranium reserves likely to last barely 85 years, according to the Red Book published jointly by the OECD and IAEA. In fact, in the past five years, the international spot price of uranium has risen faster than that of crude oil, with uranium today trading six times above its $10 a pound historical average. Oil and uranium prices are likely to stay volatile, but the long-term trend for both is surely up.

Just as cheap oil now appears fanciful, cheap nuclear power for long has 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, which do not reflect in the published costs of generation. 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 IAEA 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.

Other international studies have shown that nuclear power, although a long-matured technology, has demonstrated the slowest rate of learning in comparison to other energy technologies, including newer sources like wind and combined-cycle gas turbines. Instead of the price declining with nuclear power’s maturation, the opposite has happened. 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. In the US, two separate studies by the University of Chicago (2004) and MIT (2003) showed new nuclear power remaining comparatively more expensive.

That explains why the U.S. industry has yet to receive its first domestic power reactor order in more than three decades, despite the Bush administration offering among the world’s most-attractive tax sops and other state incentives. But in India there has been little debate on the nuclear deal’s premise — that the way to meet burgeoning energy demands is to import power reactors. While nuclear power certainly deserves a place in a diversified energy portfolio, reactors imports will be a path to external-fuel dependency and exorbitant plant costs.

India ought not to confuse its electrical generation problem with transportation fuel problem. Also, India cannot correct its oil-import dependency on the Gulf region by fashioning a new dependency on a tiny nuclear-supply cartel made up of a few state-guided firms. While oil is freely purchasable on world markets, the global nuclear reactor and fuel business is the most monopolized and politically regulated commerce in the world, with no sanctity of contract. Without having loosened its bondage to oil exporters, should India get yoked to the nuclear cartel?

With few reactors being built in the West or Russia, this cartel has aggressively sought export markets. In a bizarre spectacle, after having castigated Iran’s pursuit of civil nuclear technology as unsuited to its energy wealth, France and the US have competed to sign up reactor deals with oil-rich Arab countries. Yet, even at the current slack rate of construction of reactors, bottlenecks are becoming a serious problem for key components. There are just a few manufacturers for many components. For example, at least nine reactor components, including giant pressure vessels and steam generators, are made only in one facility owned by Japan Steel Works. A recent study by the U.S.-based Keystone Center reported a six-year lead time for some parts.

The harsh truth is that reactor imports, far from cutting India’s oil imports, will increase the already-wide price differential between nuclear energy and thermal power. While all the Indian power reactors built since the 1990s have priced their electricity at between 270 and 285 paise per kilowatt hour or higher, despite inbuilt state subsidy, the coal-fired Sason plant project in central India has contracted to sell power at 119 paise per kWh. Of the three countries lobbying to sell power reactors to India, the United States has little record to show while France’s record stands blemished by a two-year time overrun and $2.1 billion cost escalation in building Finland’s Olkiluoto-3 plant. The third, Russia, is struggling to complete its already-delayed twin reactors in Kundakulam. Wishful thinking ought not to cloud India’s options.

(The author is professor, Centre for Policy Research)

The way forward for India on an increasingly divisive nuclear deal with the U.S.

Posted on June 28, 2008 by Chellaney

Emulate America’s bipartisan handling

Brahma Chellaney

The Hindu newspaper

June 28, 2008

The way forward on the nuclear deal is not through disinterest in bipartisan consensus but by emulating the example set by the much-maligned Bush administration at home.

The political drama and uncertainty in India triggered by partisan wrangling over the civil nuclear deal cannot shroud a key fact: Three years after the deal was unveiled as a “historic” breakthrough in U.S.-India relations, its final shape remains unclear and its future uncertain. Several developments have only increased the odds that finalising and implementing the deal will be a long, arduous challenge for both sides.

The most prominent of these developments is that time has run out for the deal to be approved during U.S. President George W. Bush’s term in office. Given the extended requirements for congressional ratification set by the U.S. Atomic Energy Act and Hyde Act, it will be a Barack Obama or John McCain administration — and a new U.S. Congress — that will have the final say on the deal. While acknowledging this reality, the Bush administration, however, continues publicly and privately to prod New Delhi to play its last card by taking the safeguards accord to the International Atomic Energy Agency’s governing board for approval.

With no role to play in the subsequent stages, India may see more conditions being tagged to the deal by the Nuclear Suppliers’ Group and the U.S. Congress. Considering how the deal picked up tougher terms with each stage it crossed, there is a distinct possibility that it would attract more conditions in the remaining phases. Take the NSG process, which promises to be drawn-out in view of the impending change of administration in Washington. Although Prime Minister Manmohan Singh voiced hope in Parliament on August 13, 2007 that the NSG rule-change for India would occur “without conditions,” an unconditional waiver now looks fanciful. The Bush team is loath to share with New Delhi its revised draft proposal to the NSG.

In fact, one of the Hyde Act’s prerequisites for the deal’s congressional approval is that any NSG rule-change must mirror the conditions that legislation has set for nuclear commerce with India — from a permanent test ban and tightly regulated uranium access, to a continued prohibition on all civil nuclear fuel-cycle technologies and the right to demand the return of transferred items and materials. The Act requires that an NSG exemption should neither be less stringent nor take effect before congressional ratification of the deal. Its clause-by-clause explanatory notes state that no NSG decision should “disadvantage U.S. industry by setting less strict conditions … than those embodied in the conditions and requirements of this Act.”

The concern is that if the NSG fails to replicate U.S.-style conditions, New Delhi would do an end-run around America to buy power reactors from Russia and France. Indeed, Secretary of State Condoleezza Rice assured Congress barely four months ago that the NSG exemption will be “completely consistent with the obligations of the Hyde Act.” The Act asserts the U.S. has the “necessary leverage” in a group it founded to “ensure a favourable outcome.”

Given these realities, there ought to be neither hurry nor heat in evolving India’s strategy and options on the deal. This is an issue that needs to be discussed dispassionately, in a bipartisan spirit, without succumbing to contrived deadlines. After all, the deal centres on the very future of the country’s nuclear programme. Once India has invested billions of dollars in importing power reactors, the congressionally enforced conditions, with cyclic presidential certifications of Indian “compliance,” will effectively bear it down. Even when Washington walked out midway from a binding 30-year bilateral pact over just one plant, the U.S.-built Tarapur nuclear power station, New Delhi continued to honour the accord’s terms till the end — and even beyond to this day.

Declassified U.S. documents show that the CIA had correctly assessed that India would not end its obligations even after America had broken its word, but instead would seek U.S. help to find a substitute fuel supplier to keep electricity flowing from Tarapur. That is exactly what happened. But in return, to this day, India has exacerbated its spent-fuel problem at Tarapur by granting the U.S. a right it didn’t have even if it had not walked out of that accord — a veto on Indian reprocessing of the accumulating discharged fuel. Yet, even in the latest deal, India has inexplicably agreed to forego reprocessing until it has, in the indeterminate future, won a separate, congressionally vetted agreement.

The political passions the deal is generating make it all the more important that spin should not be allowed to obfuscate facts. Both America and China stand to gain from the qualitative and quantitative fetters the deal imposes on India’s deterrent, including the test prohibition and the forced shutdown of Cirus — one of the two research reactors producing weapons-grade plutonium. Yet vicious attacks have been orchestrated on the Left for allegedly acting at China’s behest. Disinformation has been planted to sow confusion in the BJP ranks and break the party’s steadfast opposition to the deal. Can slogans and taunts serve as a substitute to an informed debate on an increasingly complex and technical deal?

One would have expected greater transparency in a deal between the world’s most-populous and most-powerful democracies. In one telling example, the Bush administration, through a gag order on its written responses to congressional questions, has sought to keep the Indian public in the dark on the larger implications, lest the deal should run into rougher weather. In another example, New Delhi continues to shy away from explaining why it agreed to certain glaring provisions in the 123 agreement, such as its grant of an open-ended right to the supplier to suspend supplies forthwith simply by issuing a one-year termination notice on any ground, or the conspicuous absence of any dispute-resolution mechanism.

Citing the newfound support to the deal by A.P.J. Abdul Kalam or Brajesh Mishra can hardly lay to rest nagging questions. Cryptic personal opinions of individuals, however distinguished, will not obscure hard facts. After having been a party to all the Atal Bihari Vajpayee-led pronouncements against the deal since 2005, Mr. Mishra has suddenly gone solo to find virtue in the accord. All he says is that he was officially briefed and now “hopes” and “believes” the deal is no longer injurious to Indian interests. But why not share with the public any new material facts he may know?

Mr. Kalam, as scientific adviser in 1999, publicly supported the then government’s U.S.-instigated but abortive move to sign the Comprehensive Test Ban Treaty. Now, in lending support to a deal that drags India through the backdoor into the CTBT, Mr. Kalam says: “If at any time there was a fear that national security would be compromised … we can withdraw.” This shows he hasn’t studied the deal, because the one common thread running through the Hyde Act, the 123 agreement, and the safeguards accord is that India is to be barred from ever halting international inspection of its entire civil nuclear programme, even if the U.S. unilaterally terminated cooperation.

Let’s be clear: the deal has divided India like no other strategic issue. The rancorous divisiveness ought to give pause to those who may think the deal can be rammed through. Indeed, through political over-investment, the deal has been meretriciously presented as the centrepiece, if not the touchstone, of a new Indo-U.S. partnership. To depict the deal as critical to U.S.-India ties is to suggest the base of that relationship is still narrow. Any bilateral relationship cannot rise or fall on the basis of a single issue.

New Delhi’s best option today is to let the deal enter a period of suspended animation and await the new political line-up in Washington. A critical matter like this, which is going to tie India to legally irrevocable international inspections, demands a broad consensus at home. To ignore the widespread misgivings and to precipitously proceed ahead will set a treacherous and damaging precedent.

Dr. Singh had assured the nation on several occasions that he would build a broad political consensus in the deal’s favour. Just two days after signing the original deal 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.”

That is exactly the wise course he needs to follow today. The partisan acrimony needs to be defused.

New Delhi should learn from the way the much-maligned Bush administration has handled the deal domestically — by forging an impressive political consensus. 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 turned into a 41-page, conditions-stacked legislation. Bipartisan support also holds the key to the deal eventually winning congressional ratification. In India, the deal ought not to be turned into a partisan issue, for it will have to be implemented well after the present government’s term.