Thursday, July 10, 2008

Update2 :Nuclear Deal

One of the most notable events of the G-8 meeting in Tokyo this week had little to do with economic growth. In a conversation yesterday, U.S. President George Bush and Indian Prime Minister Manmohan Singh discussed a civilian nuclear deal that has been in the works for nearly three years. The pact, known as the 123 Agreement under U.S. law, would allow American firms to invest and trade in civil nuclear technologies with India -- a significant event if it occurs, given that India hasn't signed the Nuclear Nonproliferation Treaty (NPT) and has not allowed full inspections of its nuclear plants.

With only months left before Congress breaks for the U.S. Presidential elections, the time needed to finalize the deal this year may be running out. In addition to securing International Atomic Energy Agency (IAEA) and Nuclear Suppliers Group (NSG) approvals, U.S. law requires Congress to pass a joint resolution of approval.
All of this is causing the deal's backers to wring their hands, despite yesterday's sideline chat. If the 123 Agreement is not approved on Mr. Singh's and Mr. Bush's watch, it could encounter additional difficulties next year. The leadership of the Indian political party most likely to succeed Mr. Singh's Congress-led coalition, the Bharatiya Janata Party, has already announced that it wouldn't "mind another [nuclear] blast if it is necessitated." Meanwhile, John McCain and Barack Obama have pledged to ratify or amend the Comprehensive Test Ban Treaty.
Not much of this is mentioned when the deal is being sold in Washington. Within the Beltway, the deal is the business opportunity of the century, one that will strengthen global nonproliferation efforts and bring India into the international nonproliferation fold. Enabling legislation, known as the Hyde Act, requires that all U.S. nuclear assistance be suspended if India resumes testing, that the U.S. do nothing to violate its own pledges under the NPT, and that India place all of its civilian reactors under IAEA nuclear inspections in perpetuity. When questioned earlier this year House Foreign Affairs Committee chairman Howard Berman, Secretary of State Condoleezza Rice confirmed that the deal is and must be "completely consistent with the Hyde Act."
All of this sounds pretty good. There's only one problem: To garner the political support necessary to proceed with the deal, Mr. Singh and his supporters have been making a pitch back home that's the polar opposite of Washington's story board. Thus just last week, to gain the support of the Samajwadi Party (an Indian political group previously opposed the deal), the prime minister's office announced that "the 123 Agreement clearly overrides the Hyde Act" and that, as such, "there is nothing in the agreement which places an embargo on India's right to carry out a nuclear test if it thinks this is necessary in India's supreme national interest."
In the next few weeks, India is also expected to submit a safeguards agreement before the IAEA Board of Governors in Vienna. India will make a unilateral statement aimed at reserving its right to expel IAEA inspectors from reactor sites if the U.S., or other fuel suppliers, suspend nuclear fuel shipments for any reason -- including Indian resumption of testing. Indian officials are also likely to plead for nuclear fuel supply guarantees so the country can stockpile uranium fuel against future nuclear fuel supplier cutoffs that might occur -- again, following a future nuclear test. If, as expected, no IAEA board member or NSG country objects to these Indian statements, India will construe the silence as assent.
The U.S. State Department is quite aware of these views. It's a key reason why late last year, State pleaded with the House Committee on Foreign Affairs not to release the Department's unclassified answers to whether or not the Executive believed the deal required the U.S. to cut off nuclear supplies to India if it tests; if the Department thought India could stockpile U.S. nuclear fuel to reduce U.S. influence on Indian nuclear testing policies; and precisely what kind of safeguards India must agree to. Oddly, the Committee agreed to keep State's answers under wraps. This suggests American diplomats want India to think it can test with impunity while it is telling Congress India can't.
But there's more: Earlier this year, Indian Foreign Minister Pranab Mukherjee suggested India "delink" finalizing the U.S. nuclear deal from getting the IAEA and the NSG approvals. His idea was to get the U.S. to convince the IAEA and NSG to allow India to do business with any nuclear supplier state. This would then allow India to import Russian and French nuclear goods, instead of American goods which would be laden with troublesome nonproliferation conditions.
His pitch was more than hype. The U.S. actually has been twisting arms at the NSG, threatening to leave and so dissolve the group if countries critical of the India deal did not fall into line on India. Also, as a practical matter, U.S. reactor sales to India won't happen even if New Delhi refuses to buy Russian or French. Why? No private U.S. nuclear firm would risk doing business with India until it establishes a sufficient amount of Indian nuclear damage liability coverage. Given India's horrific experience with the American-built Union Carbine chemical-plant accident at Bhopal, when this will occur is anybody's guess.
* * *
All of which raises the question, if this "peaceful" nuclear deal isn't to pump up U.S. reactor sales, just what is it about? One could argue that India could use more foreign uranium. It's recently run so low on domestic fuel that it's had to reduce the power production level of its civilian reactors significantly. It also needs foreign uranium because its own uranium production has remained relatively flat, while its civilian and military requirements have risen.
This is where the trouble begins. It turns out that fueling India's civilian reactors with foreign fuel is not all that peaceful. As K. Subrahmanyam, former head of India's National Security Advisory board noted, "Given India's uranium ore crunch . . . it is to India's advantage to categorize as many power reactors as possible as civilian ones to be refueled by imported uranium and conserve our native uranium fuel for weapons grade plutonium production."
India, however, doesn't need more weapons to keep up with Pakistan; it needs more and better ones to match China. That's why India has been developing intercontinental range ballistic missiles -- weapons that could use more, smaller, lighter, efficient advanced thermonuclear warheads. This, in turn, is why India's hawks are so interested in resuming nuclear testing. That Pakistan is committed to matching India's nuclear progress, is perhaps why New Delhi has yet to ramp up. But once New Delhi has all the uranium it needs for both its civilian and military program, it will surely revisit this.
Unfortunately, glossing over these points is the most the Americans and the Indians now seem willing do. This may be diplomatically clever but strategically, it's spring loaded to produce misunderstanding and tragedy. The U.S. certainly should not finalize the deal until either India agrees it should stop upgrading its arsenal significantly or we clearly decide that we no longer care if it does. For the record, right now just the opposite applies.
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