Global Insight Perspective | |
Significance | U.S. Congressional ratification of the U.S.-India nuclear agreement, coupled with approval from the IAEA and NSG, has cleared the way for India to resume the trade in civilian nuclear technology and fuel after a three decade ban. |
Implications | The deal paves the way for the expansion and upgrade of India’s nuclear power capacity and foreign investment in India’s potentially lucrative civilian nuclear power market. |
Outlook | The deal represents major foreign policy success of both the Bush administration in the U.S. and Manmohan Singh government in India, which may strengthen the re-election prospects of the latter ahead of national-level parliamentary elections by May 2009. |
The United States Senate gave the final legislative approval for the U.S.-India nuclear agreement yesterday (1 October 2008). Approval was obtained by a vote of 86-13, which follows approval from the U.S. House of Representatives last week (see India: 29 September 2008: U.S. House of Representatives Approves U.S.-India Nuclear Agreement). Controversies arose over an attempt to amend the agreement to state that nuclear commerce with India would be terminated in the event that India conducted another nuclear test, which was abandoned in the end with the implicit recognition that the deal would be terminated in the event of future Indian nuclear tests. The fact that vote was taken despite provisions in the Hyde Act requiring that Congress vote on the deal after 30 days of deliberation suggests that it was taken under pressure of the tight legislative timetable ahead of the U.S. presidential elections next month. The final step in operationalising the deal is signing the bill into law. Speaking after the senate ratification, U.S. president George W. Bush noted that the legislation "will strengthen our global nuclear non-proliferation efforts, protect the environment, create jobs, and assist India in meeting its growing energy needs in a responsible manner," as well as "continuing to strengthen the U.S.-India strategic partnership." Indian prime minister Manmohan Singh has noted that the deal will upgrade India’s status in the "global nuclear order".
The Long Road to Ending India’s Nuclear Pariah Status
The 123 agreement ends a 34-year embargo imposed on India to conduct nuclear commerce following its first nuclear test in 1974, despite its refusal to sign the Nuclear non-Proliferation Treaty (NPT) and Comprehensive Test-Ban Treaty (CTBT). The agreement has cleared numerous hurdles, including the conclusion of a safeguards agreement with the International Atomic Energy Agency (IAEA) in August; and a waiver on conducting nuclear commerce from the Nuclear Suppliers’ Group in September (see India: 29 September 2008: U.S. House of Representatives Approves U.S.-India Nuclear Agreement and India: 4 August 2008: IAEA Approves Key Inspections Deal with India). India’s ruling Congress Party-led United Progressive Alliance (UPA) also narrowly survived a vote of confidence in parliament following the withdrawal of its leftist allies over opposition to the nuclear deal in July (see India: 23 July 2008: Coalition Government Survives No-Confidence Vote in Indian Parliament).
Outlook and Implications
Cons
Opposition to the agreement came from numerous issues, notably termination of the agreement in the event that India conducts further nuclear tests or reprocesses spent fuel and the fact that the deal could set a dangerous precedent for other countries with nuclear ambitions, as well as potentially fuelling an arms race in South Asia.
On the ideological front, India’s leftist parties argued that the deal wedded India too closely to the United States, thus sacrificing India’s traditionally non-aligned foreign policy. Members of India’s strategic community have claimed that the nuclear deal will sacrifice India’s "strategic autonomy" and "independent foreign policy" with India’s rapprochement with the United States coming at the cost of its long-standing relationship with Iran, Russia, and other traditional allies as well as sacrificing the proposed Iran-Pakistan-India natural gas pipeline. They also noted that India’s nuclear weapons programme would be compromised by restrictions on its ability to conduct future nuclear tests and reprocess spent fuel for plutonium for the country’s second-generation fast breeder reactor programme. Among this group are some opportunistic opponents to the nuclear agreement, such as the Bharatiya Janata Party (BJP), which generally sees eye-to-eye with the Congress Party on its rapprochement with the United States, but has wanted to undermine the deal in order to claim credit for it under a later BJP-led government.
Some in the scientific community have also questioned the importance of nuclear power to India’s growing energy needs, given that it comprises only 3% of the country’s energy consumption at present, which remains dominated by coal (which accounts for 50% of India’s energy consumption) and oil (which accounts for one-third of the country’s energy consumption, of which over 70% is imported).
Opponents have noted that the agreement sets a poor precedent for the non-proliferation regime by giving India the status of "nuclear exception". Under the United States-India Peaceful Atomic Energy Co-operation Act or Hyde Act, which was signed in March 2006, India will open 14 of its 22 nuclear reactors to international inspection in exchange for civilian nuclear technology and nuclear fuel. Some six reactors are already subject to IAEA inspection, with the rest scheduled to do so by 2014. By only putting 14 of its reactors under international safeguards and providing India with access to nuclear fuel, India can continue to expand it nuclear weapons programme (as long as it does not conduct another nuclear test).
Pros
The nuclear deal has been marketed as a means for India to meet its rapidly growing energy needs amid the country’s rapid growth and development and dilapidated power infrastructure, which has led to persistent power shortages. It has also been seen as a means to shift India towards cleaner sources of energy, as it has emerged among the top five countries in terms of carbon emissions. The deal also paves the way for foreign companies to access India’s lucrative and expanding nuclear power market. Earlier this week France, which is the world’s second-largest user of nuclear power after the United States, concluded the first bilateral nuclear pact with India, which includes the supply of nuclear reactors and fuel, nuclear safety, environmental protection, and nuclear fuel cycle management (see India - France: 1 October 2008: Nuclear Cooperation Pact Signed between India and France). The conclusion of nuclear agreements with France and the United States, coupled with approval from the NSG and IAEA pave the way for other countries such as Japan, Australia, Russia and Canada to follow in their footsteps. India’s civilian nuclear market needs investments of US$150 billion by 2030, according to the U.S. Chamber of Commerce. The Confederation of Indian Industry has estimated that business opportunities worth US$30 billion exist in India as it attempts to build 18 to 20 reactors to supplement the current 22 reactors to increase the country’s reliance on nuclear power from the present 3% to 25% by 2050.
On the political front, the deal is regarded as a symbol of rapprochement in the U.S.-India relationship and a major foreign policy accomplishment of the administrations of U.S. President George W. Bush and Indian Prime Minister Manmohan Singh. It may also strengthen the credentials of India’s UPA government ahead of national-level parliamentary elections by May 2009. On the other hand, the nuclear deal was never a major election issue in India, with electoral politics dominated by concerns over curbing inflationary pressures fuelled by rising food and fuel prices, addressing a growing urban-rural divide through anti-poverty schemes and addressing the deteriorating security situation amid a string of bomb attacks across major Indian cities. The Congress Party’s record on these issues is not as strong, as evidenced by its defeat in a string of state elections this year.