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India, U.S. Agree on Defense Trade Monitoring
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Jeff Abramson and Daniel Horner

India and the United States have agreed on an end-use monitoring arrangement that will make it easier for India to acquire advanced U.S. defense equipment, External Affairs Minister S.M. Krishna announced at a joint press appearance with Secretary of State Hillary Rodham Clinton in New Delhi July 20.

The pact “will boost India’s ability to defend itself through the acquisition of U.S. defense equipment while promoting American high tech exports,” according to a Department of State summary of the trip. Few details about the deal were released. A State Department official said in an Aug. 28 e-mail that the end-use monitoring text has been finalized, but is not publicly available.

The agreement is significant in part because India currently is seeking 126 fighter jets to update its air force, a contract that could be worth more than $10 billion. Major U.S. defense contractors Boeing and Lockheed Martin are part of an international competition for the contract.

The possibility of broad U.S. access to sensitive Indian defense sites was controversial in India. Typical U.S. end-use monitoring agreements place a number of limitations on recipients of U.S. defense articles, including provisions for on-site inspection by U.S. officials and prohibitions on the retransfer of the equipment.

Shortly after the July 20 announcement, Indian Prime Minister Manmohan Singh defended the agreement, telling Parliament that Indian sovereignty was not compromised and that the agreement did not allow “unilateral” U.S. inspections. According to Indian press reports citing unnamed government officials, the two countries reworked the on-site inspection system. Although U.S. inspectors will be allowed to inspect equipment purchased or transferred from the United States, the inspections will be prescheduled and occur at locations of India’s choice, the reports said. If the equipment is being used, there are provisions for rescheduling the inspection, according to the reports. The State Department official did not confirm this information but instead indicated that some of the details are still being determined.

Monitoring Nuclear Exports

Export monitoring also has been an issue in proposed nuclear cooperation between the United States and India. Last year, the United States and the Nuclear Suppliers Group (NSG), which includes the United States, lifted long-standing restrictions on nuclear exports to India. (See ACT, October 2008.) In return, India agreed to take certain steps with regard to its nuclear program, including opening some of its currently unsafeguarded nuclear reactors to inspections by the International Atomic Energy Agency.

Under U.S. law and NSG guidelines, countries generally are not eligible to receive major nuclear exports if they are not parties to the nuclear Nonproliferation Treaty.

Congress in 2006 passed legislation opening the door to renewed nuclear trade with India. The legislation, known as the Hyde Act, also contained several nonproliferation provisions, including one creating a “nuclear export accountability program.” In the congressional debate over the Hyde Act, a key concern was to ensure that U.S. nuclear exports would not boost India’s weapons program.

The export accountability provision requires detailed reporting on the use of U.S. nuclear technology exports to India. An official from the U.S. Department of Energy’s National Nuclear Security Administration (NNSA), which oversees such exports, said earlier this year that the Hyde Act establishes a process that goes beyond the tracking requirements for similar U.S. exports to other countries.

A January trip report by a nuclear industry delegation that had traveled to India cited the monitoring requirement as one of several obstacles to U.S. nuclear trade. An NNSA spokesperson said in Aug. 24 e-mail that she had “no updates” on efforts to resolve the issue.