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INDO-US NUCLEAR DEAL

The nuclear deal is expected to increase nuclear power generation in India from 4000 MW to 20000 MW by 2020. It will also spur world economic growth as nuclear plant projects worth more than $ 150 billion will be up for grabs by developed countries. The world economy, which is facing a serious downturn, is expected to get a big boost from nuclear energy investments in India.

India and the US on 10th October, 2008, Friday, operationalised the nuclear deal by signing the 123 Agreement. External Affairs Minister Pranab Mukherjee and US Secretary of State Condoleezza Rice put the final seal on the agreement at an impressive ceremony held in the Benjamin Franklin Room of the State Department, USA, culminating a crisis-ridden process, initiated on July 18, 2005 in Washington during Prime Minister Manmohan Singh’s visit for talks with US President George W Bush.

“Both India and the US administration have now completed all our internal procedures to be able to sign this path breaking agreement,” Mukherjee said after signing the agreement. The agreement paves the way for entry of American companies into the Indian nuclear market after a gap of three decades.

“Today is an important day for India-US relations, for global energy security and for our common endeavour to promote sustainable development while addressing environmental challenges,” he said at the ceremony held at the State Department. Earlier, Rice said that 123 Agreement was unprecedented and demonstrated the vast potential for strategic partnership between India and the United States. She said the nuclear deal was not just nuclear co-operation. “Today we look to the future, a shared future. Let us use the partnership to fight against terrorism, to try a new socialist agenda for the 21st century.” “India and the US can do all these together. Now, there is nothing we cannot do,” the Secretary of State said. Prime Minister Singh “literally risked his political future” for the Indo-US Nuclear Agreement and remade his government with the support he needed, Rice said, referring to the withdrawal of support to the NDA government by the left parties.

The formal signing ceremony of the bilateral agreement could not take place during Rice’s visit to New Delhi the previous week due to India’s concerns on certain riders in the US Congressional legislation on the nuclear deal. It held after US President George W Bush assured New Delhi that the new law made no changes on fuel supply assurance commitments or the terms of the agreement.

India’s Cabinet Committee on Political Affairs also gave the go ahead to Mukherjee to sign the agreement after approving the pact initiated by Prime Minister Manmohan Singh and Bush in 2005. The signing ceremony was attended among others by India’s Ambassador to the US Ronen Sen and senior State Department officials.

The Nuclear deal entered into by India and the US as part of the Indo-US agreement signed by President Bush and Indian Prime Minister Manmohan Singh during the latter’s recent visit to the US has been received differently by diverse quarters in India and abroad. Under the deal, India has undertaken to separate its civilian and military nuclear facilities, place the former under full-scope International Atomic Energy Agency (IAEA) safeguards, take various measures to prevent export of nuclear-weapons technology, contribute to other international non-proliferation regimes, as well as to continue with its declared moratorium on nuclear tests. In other words, India would with all obligations of Nuclear Weapons States (NWS) which are signatories to the Nuclear Non-Proliferation Treaty (NPT) that India has consistently held to be discriminatory and has thus never joined.

On its part, the US administration has agreed to steer appropriate provisions through the US legislature enabling supply of fuel to Tarapur (built with US) assistance in the ’60s and already under IAEA safeguards, but with fuel supplies and other technological assistance cut off due to US sanctions imposed in the wake of India’s first nuclear test Pokhran-I in 1974) and other nuclear power plants and transfer of other nuclear energy technology by the US to India, as well as to push for similar measures in the 44-country Nuclear Suppliers Group (NSG) and related actions by the IAEA. In the Agreement, the US has agreed to recognize India as a “leading country with advanced nuclear technology”, thus granting it a de facto NWS status.

Some sections in both India and the US have hailed it as a major breakthrough in Indo-US relations, perhaps even the biggest ever shift in bilateral ties with the US virtually admitting India into the nuclear-weapons club and opening the doors to the lifting of all restrictions on India acquiring civilian nuclear technology and fuel apart from other dual-use technologies. In India, several media commentators, former nuclear-establishment scientists and “strategic experts”, and leading lights of the BJP, have attacked the deal as a betrayal of Indian security interests, a surrender of its sovereignty in nuclear matters and a blow to its independent nuclear capability. Both these extreme assessments are not merely exaggerations but also fundamentally erroneous.

On the other hand, a few divergent voices, including and especially that of the CPI(M) have, while being been sharply critical of the overall Indo-US agreement, the threats to India’s independent foreign policy and the implicit acceptance by India of US hegemony in world affairs, have viewed the nuclear deal itself in a different light. There are indeed many important issues that the general discourse has not brought out with regard to India’s strategic vision, its nuclear policy both civilian and military, its energy security as well as the near-term geo-political scenario and the role of the US in it.

Many politicians and strategic experts have sharply criticized the nuclear deal for seriously compromising Indian security and its sovereign decision-making regarding the size of its nuclear “deterrent” (read arsenal). They argue that separating India’s military nuclear facilities from its civilian power plants and placing the latter under IAEA safeguards will limit the quantity of fissile material made available to the former, effectively capping India’s nuclear arsenal and making its more costly since dedicated military-nuclear facilities would have to be set up.

The underlying assumption of this critique is clearly that Indian security lies foremost in nuclear weaponization and its unfettered expansion. This militarist strategic perception has consistently been opposed by the left and the Broader Peace and Disarmament Movement, a position vindicated by Pakistan’s tit-for-tat overt nuclear weaponization and its Kargil adventure despite the mutual ‘deterrence’. Peace-loving forces in India have long held that Indian security is not dependent on nuclear weapons, and have demanded first a cap and then a roll-back of the nuclearisation of India and the South Asian region.

In practical terms, the deal is expected to assist India in its quest for nuclear fuel towards its stated goal of 20000 MWe of nuclear power in the next decade compared to the present about 4000 MWe, a target India has set keeping in mind its projected energy requirements and the cost and environmental limitations of conventional energy options based on oil, gas, coal and hydro power. India has limited sources of natural uranium and it will take considerable time to develop thorium-based technology. Given the restrictions on supply of nuclear materials by the Nuclear Suppliers Group, sourcing of heavy water from Russia, the mainstay of most nuclear power plants in India, has also become highly problematic. Countries such as Russia and France are also eager to assist in setting up nuclear power plants in India. Reports have suggested that US-based companies such as Westinghouse are also keen to export to India.

In fact, the real regret is that the agreement contains no mention of universal nuclear disarmament, a goal enshrined in the very NPT by which the NWS club swears but does everything to prevent. None of the various speeches made by the Prime Minister in the US even mentioned the Rajiv Gandhi Plan, the last major initiative by India towards this goal. In its eagerness to please the US, if the Congress-led UPA could not even remember its own slain leader, it is scarcely surprising that it has totally ignored the commitment made in the Common Minimum Programme to make efforts towards this goal which the Left and the Peace Movement in India take very seriously indeed.

How does US benefit with this Deal?

President Bush is looking forward at the changing times. For the last 25 years, India was excluded from the group of countries who signed NPT thus the co-operation between India and USA was limited or say they were not as close as they need. Today, India commands a respectable position in the world and emerging as a super economic power so, ignoring him can make the USA feel uneasy. India, for not signing the NPT, was barred from any civilian use nuclear technology and materials. By signing Nuclear Deal with India, the co-operation between India and USA would take a new positive turn and would reach to the best heights so far in the history.

Economic Benefits to US

If India sets up 10 large size nuclear power plants, which is its intent in next 15 years, India will import technology and hardware from US for these projects. In short, orders worth $ 15-20 billion could be placed with the US companies in next 6 to 8 years. Remaining orders may go to France, Germany, Canada and UK. Fund for these installations will come to India either in form of FDI or soft and commercial loans. In return India will pay it back with goods and services export, in the same way China did it for the past 25 years. It is a win-win situation for the USA and India.

Another example of emerging Indo-US co-operation is in the area of aerospace industry. Order for $ 8 billion worth of commercial airplanes has been placed with Boeing of Seattle. Another big order for 125 military planes is on the way. The high tech manufacturing industry is at a take off stage in India. In last 3 months, announcements by big US companies totaling $ 7 billion dollars investment have been made. This has gone far beyond India’s expectations. This sector together with IT services and BPO will power the US industry and businesses into higher profitability and help India accelerate its growth.

US are looking for a low cost supplier that could be an alternative to China.

Political Benefits to US

India as a strategic partner in ensuring safety of sea-lanes of the Indian Ocean is very valuable. At the moment as long as US stays in Iraq and Afghanistan, the world will perceive US as a big bully. A major regional power, with a different outlook than the European and the US is needed to cool the tempers off. India has to step in to prevent further sliding of the Middle East into anarchy.

Military Benefits to the US

US benefits immensely with India as a major military power. Forty per cent of worlds’ oil and commerce passes through the Indian Ocean sea-lanes. These today are unprotected. Pirates in the Red Sea and at the Malacca Straits prey on commerce. Indian co-operation will be helpful in keeping the sea-lanes free.

Another indirect benefit for US appears to be their assessment that India could be a counter weight to a “rising China” in the region. This is not the view of Indian policy makers who believe that a constructive engagement with China is more beneficial and not linked to any military or strategic relationship with USA.

What does India get out of the Deal?

India will surely benefit immensely from this deal. First and foremost, is the de-facto recognition of India as a nuclear power? Second, is future recognition of India as a permanent UN Security Council member? India has tried this in last three years. It has not succeeded. When UN reforming movement gains strength in the future, India will be right there and waiting for this opportunity.

Economic Benefits to India

There is an urgent need in India for capital to build its infrastructure manufacturing base and there is only one source to get it i.e., US and Europe with increased co-operation, commercial aircraft manufacture, ship building factories to make giant power plants, steel making plants, mining and drilling hard ware, petroleum and petrochemical plant building facilities would shared with India. India has a workforce sufficiently skilled to undertake the foregoing projects. It will be beneficial to US too. Labour costs in always stays a third of US, and European costs. That will make India an ideal candidate for this technology transfer.

With signing of this deal opportunity of the KPO (Knowledge Process Off-shoring) would be knocking at India’s door. Indian graduates of Science and Engineering will play a major role in this expansion. Thanks to the edge Indian Science and Technology graduates have established in the world.

Political Benefits to India

Gone will be the days that US politicians will heap scorn on India, the way they are doing it today. The Indo – US Nuclear deal is in fact dumping the past and unlocking the hidden potential of the future. With western economies tied more and more with India, the latter’s clout will improve. There will be frequent inter-government exchanges on matters of mutual interest. India could become a full member of the select group of G-8 members. In addition Pakistan may get the cue and begin a rethink of its policies towards India.

Military Benefits to India,

Indian military is in need to diversify its sourcing of military hardware.  Russia has been a very reliable source for the past 40 years. This source has to be diversified. Ultimately, all military hardware will have to be produced in India. But, development time in India is too long and success factor is low. This has to be speeded up. The only way at India’s disposal is to buy its immediate needs and import technology to develop its own weapon system. It is a bit expensive up front but pays dividend later as India joins the select group of countries as a source of military hardware.

Technological Leapfrog

The immediate benefit in the field of technology would be in getting the latest technology for nuclear power generation and other related fields.  Current progress in India in building its own nuclear power plants is very slow. With signing this deal India will be in a position to import technology and share views and knowledge with European countries including the USA.

Latest Development Delay in Implementation

The ground-level implementation of the Indo-US civil nuclear deal will take at least two years since finalizing the business model with the Nuclear Power Corporation of India Ltd (NPCIL) by the US vendors is going to be the “time consuming” effort, a top nuclear business expert said.

“Most time consuming effort in the entire deal is to work out the business model that will end up with a tariff rate in rupees per kilowatt-hour which is acceptable to the Nuclear Power Corporation of India Limited,” Director of Government Programmes of a global energy company USEC Inc, Vijay Sazawal told PTI here.

“This model is so different and will take at least two to two-and-a-half years to work out,” he said.

Referring to the modalities involved, Sazawal said, “This particular track is the one that US vendors are most unfamiliar with and may end up to be the most critical path in the execution of final contract between American Nuclear Suppliers and the NPCIL”.

Observing that the Indo-US nuclear deal is a continuous and multi-dimensional effort at the government-to-government level, Sazawal said the respective governments are trying to exchange ideas and projects regarding safety, improvements in technology and other areas of common interests.

Conclusion

Thanks to diplomatic and political skills of President Bush and Prime Minister Manmohan Singh, we have a deal which could lift India into the trillion-dollar club, faster. They both have worked hard. Ten years from now. When electricity supply situation in India’s households, industry and farms is significantly better, we have to thank them both. The nuclear deal is expected to increase nuclear power generation in India from 4000 megawatts to 20000 megawatts by 2020. It will also spur world economic growth as nuclear plant projects worth more than $ 150 billion will be up for grabs by developed countries. The world economy, which is facing a serious downturn, is expected to get a big boost from nuclear energy investments in India.

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