The Gift that Keeps on Taking

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On July 18, 2005, President George W. Bush and Prime Minister Manmohan Singh stoof on the White House grounds to announce their intention to implement a civil nuclear cooperation agreement. To do so would require overcoming significant political obstacles in both countries and engineering major changes in the international rules of nuclear commerce.  President Bush accepted these challenges, noting that, “as a responsible state with advanced nuclear technology, India should acquire the same benefits and advantages as other such states.”  For his part, Prime Minister Manmohan Singh promised that “India would reciprocally agree that it would be ready to assume the same responsibilities and practices…as other leading countries with advanced nuclear technology.”

U.S. ties with India improved greatly during the second Clinton and first Bush administrations.  This momentum could have accelerated with increased cooperation on space projects, infrastructure, or water management.  The White House could have focused on noncontroversial sectors to expand trade and investment.  But President Bush became convinced that the next step should be the hardest: changing the global nuclear order to benefit India.  This step would prove to be so time-consuming that other major initiatives would have to await their turn.   

The Bush administration decided to proceed without demanding that New Delhi limit in any meaningful way its nuclear weapon options.  Most arms control and nonproliferation NGOs reacted negatively.  The push for favorable votes on Capitol Hill was led by big business.  Ron Sommers, the president of the U.S.-India Business Council, an affiliate of the U.S. Chamber of Commerce, estimated that the agreement would create up to 27,000 “high quality” jobs per year.  Prominent U.S. firms such as Boeing, Bechtel, and AIG strongly supported this initiative, as did other major corporations wishing to increase profits in India. 

The arguments in favor – and the political liabilities of opposition – proved persuasive on Capitol Hill, which approved the deal in 2006.  After the votes were finally tallied, Sommers predicted:

“A massive scope for commercial opportunity between US and Indian companies will also be the result, valued at more than $150 billion over the next 30 years, spurring a revival of the nuclear power industries of both countries that will create as many as a quarter million high-tech U.S. jobs for generations to come.”

Opposition from both ends of the political spectrum was more strenuous in India, where legislative approval was finally secured in July 2008.

Perhaps the biggest obstacle to the deal was the Nuclear Suppliers Group, the world’s only cartel designed to prevent profit taking when weaker constraints on proliferation were likely to result.  The NSG requires consensus for rule changes, and one of its cardinal rules was to make full-scope safeguards in the recipient country a condition of nuclear commerce.  This rule previously blocked nuclear sales to India, Pakistan and Israel.  Despite many reservations, the NSG signed off on the deal in September, 2008.  The lure of the Indian market and the lobbying efforts of prospective profit takers – especially Russia, France, and the United States – proved decisive.

Five years later, the U.S.-India nuclear deal looks increasingly like the gift that keeps on taking.  The promise of U.S. jobs and profits from nuclear commerce has been unrealized.   The Indian government still has not convinced the Lok Sabha to pass legislation limiting liability in the event of a nuclear accident – a necessary condition for U.S. firms to engage in nuclear power plant construction in India.  This legislation, which has been bruited about for ten years, is haunted by the ghosts of the 1984 Union Carbide disaster in Bhopal in which a gas leak and subsequent contamination caused approximately 4,000 deaths and as many crippling injuries.  The wheels of justice can turn slowly in India: a verdict in the 23-year long trial is reportedly near.  Union Carbide paid $450 million in 1989 to compensate victims for damages.  The current Indian draft legislation would limit damages in the event of a nuclear accident to $100 million.

Skeptics of the U.S.-India civil nuclear deal confidently predicted the difficulty in passing meaningful liability limitation legislation and the remote likelihood of significant U.S. jobs and profits from nuclear commerce, but to no avail.  The real motivation behind the Bush administration’s initiative lay elsewhere, in forging a strong strategic partnership with India and facilitating Delhi’s ability to become a counterweight to China.  The removal of India’s nuclear stigma served both purposes.  For corporate boosters of the deal, nuclear commerce was a loss leader: support was a necessary business expense for U.S. firms hoping for greater market share in other sectors, including defense sales.

So far, the biggest gift recipients of the U.S.-India nuclear deal have been Russia and France.  The biggest loser has been nuclear nonproliferation.

Soon after the U.S.-India deal was announced, state-supported firms in France and Russia, unconcerned about liability limitation, contracted to build power plants in India.  The French company, Areva, signed a Memorandum of Understanding in February 2009 with the Nuclear Power Corporation of India to construct up to six new power plants.  In December 2009, Russian President Dmitri Medvedev visited India to sign an agreement to construct another six nuclear power plants. 

The U.S. Congress, uneasy about a resumption of Indian nuclear testing, stipulated the right to withhold nuclear fuel supplies in this event.  (Fuel supplies were cut off after India’s 1974 test, which remains a sore point.)  The Bush administration, not wishing to tie New Delhi’s hands, vitiated this language in the deal’s implementing agreement.  France and Russia weakened this constraint even more by moving quickly to guarantee fuel supplies for power plant operations.  A Russian firm, TVEL, signed a $780 million deal to supply 2,000 metric tons of fuel in February 2009.  Areva’s deal included fuel supplies.  These deals free up domestic uranium supplies for military purposes, while providing a cushion against export controls in the event of renewed nuclear testing. 

The Government of India does not include signing the Comprehensive Test Ban Treaty among the “responsibilities and practices “of “leading countries with advanced nuclear technology. ” Prime Minister Manmohan Singh was perfectly clear on this subject when seeking final passage by the Lok Sobha of the nuclear deal:      

“I confirm that there is nothing in these agreements which prevents us from further nuclear tests if warranted by our national security concerns. All that we are committed to is a voluntary moratorium on further testing. Thus the nuclear agreements will not in any way affect our strategic autonomy.”

If India decides to resume nuclear testing after being gifted with a change in the rules of nuclear commerce, grave damage would result to the Nonproliferation Treaty and to its backstopping bodies, especially the NSG.

Pakistan also wants a nuclear deal to signal international acceptance into the nuclear club.  China has recently obliged, with extremely generous terms.  Beijing may assert that the two new plants to be constructed were grandfathered by a deal struck before China entered the NSG in 2004, or it may dispense with this cover story altogether.  The net result of the Indian and Pakistani nuclear deals will surely be to expand nuclear weapon capabilities in this triangular competition and to make restraints harder to devise.  Pakistan is likely, as before, to fulfill its deterrence requirements more purposefully than India, and is quite set on building the infrastructure to compensate for its bleak assessments of Indian nuclear potential.

Signaling its displeasure with the U.S.-India nuclear deal and reflecting its troubling assessments, Pakistan has blocked the initiation of negotiations in the Committee on Disarmament on a fissile material “cutoff” treaty.  This form of diplomatic overkill may be transitory; if negotiations do get underway, Pakistan and India are likely to stall progress as they accumulate stocks perceived as necessary for their troubled region.  China, India and Pakistan continue to buck global trends by increasing their nuclear weapon stockpiles.  All three believe that air-, sea- and ground-based nuclear forces are necessary for deterrence, and are modernizing their triads.  All three are also inducting new cruise as well as ballistic missiles.

An accelerated, triangular nuclear competition in southern Asia adds to the strains now felt by the NPT.  Cause and effect in these matters are rarely clear – except with regard to the China-Pakistan nuclear deal following on the heels of the Bush administration’s generous offer to India.  The global rules of nuclear commerce, established with such care with U.S. leadership over the past decades, are now in greater jeopardy, as are international efforts to tighten safeguards at nuclear facilities. 

More and more states now have more latitude to go their own way and cut their own deals, as Brazil and Turkey did recently with Iranian enrichment programs.  Turkish Prime Minister Recep Tayyip Erdogan, speaking in Madrid on May 18th, offered this rejoinder to those pursing a new round of sanctions against Iran, especially the P-5: “Where is your credibility if you have nuclear weapons but are telling other countries not to have them”?

And what of the Bush administration’s bigger picture – facilitating India’s rise to serve as a counterweight to China?  Of all the ways and means to facilitate India’s rise – a worthy policy objective – doing so by means of nuclear weapons and nuclear power were unwise choices.  New Delhi will not make its choices with respect to China in deference to Washington’s preferences or in repayment of gifts.  India’s leaders are quite capable of determining their national interests; the U.S.-India nuclear deal will not change New Delhi’s calculus – whether bilateral interests coincide or diverge.


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