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"No one can solve this problem alone, but together we can change things for the better." 

– Setsuko Thurlow
Hiroshima Survivor
June 6, 2016
U.S.-Indian Nuclear Deal Advances
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Wade Boese

The United States and India completed negotiations July 27 on a bilateral nuclear cooperation agreement, edging them closer toward erasing long-standing U.S. and international nuclear trade restrictions on India. But before realizing that goal, the two governments must still win over their own lawmakers and other countries, some of which, most recently Australia, are already angling to do business with India.

President George W. Bush and Prime Minister Manmohan Singh two years ago launched the initiative to expand U.S. and global nuclear trade with India. In broad terms, the United States pledged to help India shed its roughly three-decade status as a nuclear trade pariah. New Delhi had earned that status for carrying out a 1974 explosion of a nuclear device fashioned partially from U.S. and Canadian nuclear imports intended for peaceful purposes. In return for the promised U.S. effort, India vowed to grant greater foreign oversight to a select portion of its nuclear enterprise.

Bush officials saw overcoming the nuclear trade impediments as a means of forging closer strategic and economic ties with India. Undersecretary of State for Political Affairs Nicholas Burns told reporters July 27 that it was Secretary of State Condoleezza Rice who went to New Delhi in the spring of 2005 “with this big idea to break through three decades of separation.”

Washington released Aug. 3 the text of the pact, known as a 123 agreement after the section of the Atomic Energy Act of 1954 that requires such instruments. It is supposed to govern future U.S. and Indian nuclear commerce for at least 40 years once it takes effect. Burns, the lead U.S. negotiator in the talks, heralded the agreement as “perhaps the single most important initiative” ever between the two countries.

Not everybody greeted the pact enthusiastically. Some Indian parliamentarians Aug. 13 tried to shout Singh down when he briefed them on the agreement. The Bharatiya Janata Party, the main opposition group, contends the pact will impinge on India’s nuclear weapons program, while some members of India’s Communist parties, which support Singh’s coalition government, allege India is kowtowing to the United States. India’s parliament does not have a vote on the pact, but it could engineer procedural hurdles to slow or sink implementation of the agreement.

Meanwhile in Congress, Rep. Edward Markey (D-Mass.), an outspoken critic of the deal, derided the agreement Aug. 13 as “nuclear capitulation to India’s every wish.” House Foreign Affairs Committee Chairman Tom Lantos (D-Calif.) cautiously noted Aug. 3 that he would review the pact to see whether it conformed to legislation that lawmakers passed last December setting the stage for further nuclear cooperation. (See ACT, January/February 2007. ) Congress must approve the 123 agreement for it to enter into force.

That critics in New Delhi and Washington allege that their governments were duped in the negotiations reflects domestic politics in each country as well as the compromise nature of the pact. In response, both governments have interpreted key and controversial aspects of the agreement to their benefit and to stifle detractors. Nevertheless, the agreement tilts more to India’s initial negotiating positions than those argued by the United States.

The 123 Agreement

U.S. and Indian negotiators wrangled for more than a year on several matters in which India was seeking exceptions or privileges that went beyond most other U.S. 123 agreements with foreign governments.

Although India pledged in July 2005 to continue a nuclear testing moratorium, New Delhi opposed any explicit provision in the 123 agreement terminating cooperation if it conducts a future nuclear test. Such termination provisions are standard features of U.S. agreements with non-nuclear-weapon states. India, which has nuclear weapons, is classified as a non-nuclear-weapon state by the 1968 nuclear Nonproliferation Treaty. New Delhi has never signed the accord.

The U.S.-Indian agreement does not contain the word “test,” nor is there an automatic trigger to cease cooperation for any activity or violation by either country. Singh Aug. 13 asserted the pact “does not in any way affect India’s right to undertake future nuclear tests.”

India could choose to test, according to U.S. officials, but that does not mean that there would not be repercussions. In an Aug. 6 interview with Times Now television, Burns noted that India has a sovereign right to test but that, under U.S. law, the president would have “the right to end the agreement.”

Article 2 of the 123 agreement maintains that countries will implement cooperation “in accordance with its… national laws.” The Atomic Energy Act mandates an end to nuclear trade with a non-nuclear-weapon state that conducts a nuclear test. The president could waive such a termination but Congress has the power to nullify that waiver by passing a resolution in opposition.

U.S. law also holds that Washington retains a right of return of its nuclear exports if the recipient conducts a nuclear test, and most 123 agreements explicitly reiterate that right. But India fought against including such a provision.

The agreement does authorize each country to seek a right of return in the event that it chooses to terminate the agreement, which requires one year’s notice in writing and consultations before taking effect. But the agreement also aims to dissuade such a move by stressing that “exercising the right of return would have profound implications” on the two countries’ relations. Other U.S. 123 agreements do not contain similar language.

Another unique feature is the inclusion of “fuel assurances” for India. These provisions commit the United States to “support” New Delhi in establishing a “strategic fuel reserve” in case foreign fuel supplies are ever halted. In such an event, the United States vows to assist India in pursuing a resumption of outside fuel supplies.

Foreign fuel supplies are critical for India because it lacks sufficient domestic resources of uranium to make reactor fuel to continue powering its entire nuclear enterprise at full capacity, let alone support its nuclear energy expansion plans. In his Aug. 13 address, Singh noted that “indigenous supplies of uranium are highly inadequate, and hence we need to source uranium supply from elsewhere.”

Critics contend that foreign fuel supplies will free India from having to decide between using its uranium to make energy or nuclear weapons by enabling it to use foreign fuel for energy and domestic resources for weapons. Although U.S. lawmakers expressed concern that India not ramp up its nuclear weapons activities after it begins to import foreign nuclear fuel, Burns noted July 27, “[W]hat India does on the strategic side is India’s business.”

The 123 agreement specifies that the U.S. fuel assurances apply to “any disruption,” suggesting that were the United States to cut off nuclear fuel supplies or trade with India because it conducted a nuclear test or violated the agreement in some way, Washington still would be required to help other countries fill the void.

The fuel assurances seemingly contradict Congress’s guidance staked out in its December 2006 legislation, known as the Hyde Act after then-chairman of the House International Relations Committee Henry Hyde (R-Ill.). The nonbinding “sense of Congress” portion of the Hyde Act states that the United States “should not seek to facilitate or encourage the continuation of nuclear exports to India by any other party” if the United States ends cooperation under law. In addition, lawmakers in a joint explanation of the Hyde Act noted that any fuel assurances should pertain to disruptions caused by “market failures or similar reasons, and not due to Indian actions” that break its commitments.

Lawmakers also stated in their report that development of any Indian strategic fuel reserve should be “commensurate with reasonable reactor operating requirements” and not so large to install India with confidence that it could act with impunity. On Aug. 13, Markey observed that the agreement’s strategic reserve provision “would render toothless any termination of trade if India breaks the agreement.”

Indian officials trumpeted the assurances. Singh claimed that the measures “ensure that there is no repeat of our unfortunate experience with Tarapur.” The United States cut off fuel supplies to India’s Tarapur reactors after the 1974 test, which forced India to scramble to procure fuel to keep them running.

In addition to fuel assurances, New Delhi secured a U.S. commitment in principle to permit India to reprocess U.S.-origin spent fuel. Reprocessing involves the harvesting of plutonium from nuclear fuel after it is used in a reactor. Because plutonium can be used to make nuclear weapons, standard U.S. policy is to deny other countries advance reprocessing rights. India is now set to join the other two exceptions to that policy, Japan and the European consortium EURATOM.

To take advantage of that right, however, India would have to construct a new reprocessing facility under International Atomic Energy Agency (IAEA) safeguards to handle U.S.-origin spent fuel, as well as that of other countries. IAEA safeguards are measures to ensure that nuclear material and technologies for peaceful purposes are not diverted to making bombs.

In addition, the U.S. and Indian governments must agree on “arrangements and procedures” under which any Indian reprocessing of U.S.-origin spent fuel could occur. The agreement declares that such talks should begin within six months of a request by either party to start them and should finish within one year.

The agreement also provides the option for the two countries to conclude future arrangements to trade reprocessing and enrichment technologies. Enrichment is the process through which natural uranium is transformed into nuclear fuel and, if carried to a certain point, fuel for nuclear weapons. The Hyde Act limits such transfers to India to the limited scenarios in which the recipient is a multinational facility involved in an IAEA-approved project or a facility involved in a multinational project to develop a “proliferation-resistant fuel cycle.”

The concessions to India on enrichment and reprocessing stand in contrast with the administration’s global effort to dissuade states from acquiring such capabilities. In a February 2004 speech, Bush declared that “enrichment and reprocessing are not necessary for nations seeking to harness nuclear energy for peaceful purposes.” (See ACT, March 2004. )

Next Stops: The IAEA and the Nuclear Suppliers Group

Before Congress votes on the 123 agreement to initiate U.S.-Indian nuclear trade, India must first negotiate a safeguards agreement with the IAEA. That agreement will have to be approved by a majority of the agency’s 35-member Board of Governors.

In addition, the 45-member Nuclear Suppliers Group (NSG) must agree by consensus to exempt India from a 1992 group rule, adopted at U.S. insistence, that significantly restricts trade with non-nuclear-weapon states that do not subject all of their nuclear facilities and materials to IAEA safeguards. Such comprehensive safeguards are known as full-scope safeguards. The safeguards agreement India intends to negotiate would not cover its full nuclear complex.

New Delhi maintains that it will seek “India-specific” safeguards to its declared civilian nuclear facilities. In March 2006, India announced that 14 of its 22 existing or under-construction power reactors would be declared civilian and that the other eight would be classified as military and off-limits to safeguards. Six of the 14 reactors designated as civilian already were subject to or slated for safeguards.

India exempted from safeguards its test breeder reactor and prototype breeder reactor, which produce more plutonium than power reactors. New Delhi further reserved the right to declare as military all future reactors it builds. (See ACT, April 2006. )

No official definition of “India-specific” safeguards has been made public, but reportedly the notion is that safeguards would only be operational when foreign nuclear materials and technologies are present at a facility. The 123 agreement states that the future safeguards should be in “perpetuity,” but it also notes India’s right to take “corrective measures” if foreign fuel supplies are disrupted. Neither the U.S. nor Indian government has explained what these “corrective measures” might entail.

India was waiting on the conclusion of the 123 agreement before beginning negotiations with the IAEA. Although Burns suggested in an Aug. 6 interview with Aajtak news agency that Washington hoped that an IAEA-Indian agreement could be completed “no later” than Sept. 1, it was unclear in late August whether the two sides had started negotiations. The Indian government did not respond to Arms Control Today’s questions about the status of the process, and the IAEA declined to answer questions on the matter.

Completion of the safeguards agreement is viewed by NSG members as a prerequisite for any group decision on India. Still, Washington reportedly is seeking to prepare group members with a Sept. 30 briefing on the 123 agreement. The NSG generally makes decisions at an annual spring plenary meeting, but extraordinary meetings can be convened to take an action.

Group members reportedly are divided about giving India special treatment. France, Russia, and the United Kingdom support the U.S.-Indian initiative, but several members remain skeptical.

Some members also have suggested that instead of solely granting India a 1992 rule exemption, the group should establish certain criteria that must be met by an interested government in order for the rule to be waived. Such an approach could conceivably open the door for Pakistan and Israel to seek nuclear trade from NSG members (see page 38 ).

Washington and New Delhi strongly oppose this concept. Indian officials have stressed that that they want a “clean” NSG exemption that does not impose any conditions or restraints on future nuclear trade.

If India successfully completes its negotiations with the IAEA and the NSG decides to make India eligible for nuclear trade, the administration will then present the 123 agreement to Congress for a vote. Burns said July 27 that he hoped the agreement would be before lawmakers prior to the end of this year.

An Open Field

When Congress receives the agreement for consideration, it could be confronted with the reality that other governments are already courting India with their nuclear wares. Unless conditioned in some way, the NSG decision that serves as the trigger for the 123 agreement to be sent to Congress would void the international restraints on other suppliers engaging in nuclear commerce with India, possibly under terms less restrictive than those envisioned by the United States.

Since the July 2005 initiative was announced, France and Russia have started to position themselves to pursue nuclear deals with India. Australia recently joined the queue.

Australian Prime Minister John Howard said Aug. 16 that his government would drop a long-standing prohibition against supplying uranium to India. He conditioned the move on India having appropriate safeguards in place, an NSG decision to relax its restriction against trade with India, and the “conclusion” of the U.S.-Indian 123 agreement, including its approval by Congress. Opposition Labor Party officials have criticized the initiative, and an Australian election will take place sometime this fall that could unseat Howard.

Future Australian shipments of uranium to India would breach Australia’s legal commitments under the 1985 South Pacific Nuclear-Weapon-Free Zone Treaty. Australian Foreign Minister Alexander Downer told the Australian parliament in October 1996 that, in dealings with non-nuclear-weapon states, the 1985 treaty “imposes a legal obligation not to provide nuclear material unless subject to…full-scope safeguards.”

Although some countries might get an early jump on trade with India, Burns said he expects U.S. nuclear companies to have a fair opportunity to compete. “We are confident that American companies will have equal access to this huge market and that they will succeed there,” he stated.

In addition, Burns predicted that the nuclear policy changes might also benefit U.S. arms manufacturers, claiming that he sees “far greater defense cooperation” between the United States and India. Washington is currently offering New Delhi advanced U.S. fighter jets and has pitched anti-missile systems.