The False Promise of the Civil Nuclear Deal

July 14, 2011

By Michael Krepon - Six years ago, President George W. Bush and Prime Minister Manmohan Singh announced their commitment to a civil nuclear energy cooperation agreement at the White House. The Bush administration pledged to take the lead in persuading the 46-member Nuclear Suppliers Group to make an exception to its restrictive rules to permit nuclear commerce with India. In return, the deal's backers in the United States expected profits, jobs and a transformed U.S.-India partnership to help counter China's rise. 

Prior U.S. administrations had worked hard to beef up the NSG by persuading its members to operate by consensus and by trying to condition nuclear commerce to the acceptance of full-scope safeguards and tougher inspections. India couldn't possibly meet these tests, given its nuclear weapon programs. The Bush administration judged that the potential benefits of making an exception for India were worth the risks to the Nonproliferation Treaty and the NSG, the only cartel ever designed to prevent profit-taking. 

Skeptics of the deal argued that by giving India preferential treatment, it would become harder to strengthen nonproliferation norms for everybody else. Another perceived risk was that the two other outliers, Pakistan and Israel, would also seek exceptions which, if granted, would further weaken the treaty, given the illicit nuclear dealings by Pakistani authorities and the sensitivity of Israel's nuclear program elsewhere in the Middle East. A third risk was that, by granting Indian demands for transfers to enrich and reprocess spent fuel under safeguards, it would make it harder to put the brakes on national enrichment and reprocessing programs elsewhere. A fourth perceived risk had to do with granting Indian demands for fuel supply reserves. Fuel supplies were suspended after India carried out nuclear tests. If abundant fuel were on hand, New Delhi might find it easier to resume nuclear testing.

These arguments fell on deaf ears. Skeptics were mostly confined to "nonproliferation ayatollahs," to use the parlance of Indian pundits. The irony of this epithet was lost to those who could see no connection whatever between trying to tighten nonproliferation screws for Iran while loosening them for India. Industry and geo-political thinkers backed the proposed deal. During President Bush's second term, helping a friendly country trumped proliferation concerns. Administration officials were, in any event, deeply unenthusiastic about convincing New Delhi to sign the Comprehensive Test Ban Treaty and to accept a voluntary cessation of new fissile material production for weapons - the two steps that could best dampen down-side risks and compensate for the exceptional treatment they proposed to grant India. The Bush administration's facile talking point was that the nuclear deal would bring India into the "nonproliferation mainstream."

The Bush administration was very adept at creating a sense of political inevitability behind the deal. The U.S.-India Business Council at the U.S. Chamber of Commerce, a collection of heavyweight companies including AIG and defense contractors like Boeing, Northrup Grumman and Lockheed, rallied in support of the deal's door-opening possibilities. The nuclear deal alone was projected by Ron Sommers of the U.S.-India Business Council to produce 27,000 "high-quality" jobs. The House and Senate voted overwhelmingly to endorse the deal.

What has happened since? In May 2009, Pakistan began to block negotiations on a fissile material production cutoff treaty. At the May 2010 review of the Nonproliferation Treaty, Brazil, Egypt and South Africa refused to endorse tougher inspections as a condition of nuclear commerce. In August, 2010, the Indian Parliament passed liability legislation for nuclear plant builders and suppliers in the event of accidents. With the gruesome 1984 Union Carbide accident at Bhopal very much in mind, parliamentarians chose to impose liability provisions that will make it exceedingly difficult for U.S. firms to build or supply nuclear power plants in India.

In September 2010, China confirmed that it would sell Pakistan two additional nuclear power plants at concessionary rates, without regard for the rules and procedures of the Nuclear Suppliers Group. In March, 2011, India, a rotating member of the U.N. Security Council, abstained from voting on a resolution approving "all necessary measures," including imposition of a no-fly zone over Libya. In April 2011, the Indian Government decided against purchasing fighter planes from Boeing and Lockheed Martin in its $9 billion Medium Multi-Role Combat Aircraft competition. European firms will win this jackpot. In the June meeting of the IAEA Board of Governors, India voted to abstain on referring Syrian noncompliance to the UN Security Council.

Six years later, what do the costs and benefits of the U.S.-India civil nuclear deal look like?

First, even with the positive outcome of the 2010 NPT Review Conference, nonproliferation norms have been weakened and, at best, will take time to reinforce. The deal has added to the IAEA's woes and has made the NSG a weaker institution.    

Second, negative nuclear trend lines within Pakistan have grown steeper and will be harder to reverse.

Third, the arc of U.S.-Indian relations has improved, but with far less loft than the Bush administration's deal makers conceived. Trade and investment will grow, as will defense sales and cooperation in some areas. This would have been the case whether or not the Bush administration had decided to pursue the civil nuclear deal. Indeed, these advances were delayed because it took five years of high-level attention to close this deal.

Fourth, the notion of India joining the "nonproliferation mainstream," as advocates of the deal predicted, has been a mirage. Instead, New Delhi has closed ranks with NAM states balking at stronger nonproliferation norms. India remains in limbo on the CTBT, seemingly far from ready to sign or to resume underground tests. Fissile material production for nuclear weapons continues; India, like Pakistan, may have doubled its inventory of nuclear weapons over the past decade.

Fifth, New Delhi continues to titrate improved strategic cooperation with the United States, especially given domestic political sensitivities about U.S. infringements on Indian sovereignty. New Delhi also continues to improve ties with Beijing. It is folly to presume that Washington can leverage New Delhi's dealings with Beijing. The civil nuclear deal was a poor choice to help India become a stronger counterweight to China.

Why, then, did the Bush administration make this deal the centerpiece of bilateral relations during its second term? Why tackle the toughest nut first, incurring unnecessary and perhaps long-lasting damage to nonproliferation norms? It's obvious why New Delhi embraced the Bush administration's gift horse of a civil nuclear deal. Those in India who argued that it was a Trojan horse have been proven wrong on every count. So far, U.S. backers of the deal have also been wrong on every count.

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