Excerpts from a talk by Shyam Saran, Special Envoy of the Prime Minister on 10 January 2007. The talk was organized by the Institute of Defence Studies and Analyses at the India Habitat Centre

Shyam Saran

The Indo-US Nuclear deal has generated much more debate than any other foreign policy issue in India in recent times. Public debate on this deal is of great value, especially if it is informed. There is a difference of views as to how important the deal is for India. This lecture will elaborate upon the significance of the legislation passed by the US Congress and the probable next steps leading to its implementation. However, what one must keep in mind is that this is not reality as yet.

In the bag, there is the enabling legislation meant for the US Congress to allow for the sharing of civil nuclear energy with India. The negotiations for the 123 Agreement are still ongoing. The parallel processes going on are of the Nuclear Suppliers Group (NSG) to adopt a similar plan and the IAEA to pass India-specific safeguards. There are many components to the deal. The signing of the legislation is a precondition to the other components. The US administration has incorporated waivers from three requirements:

1) The US cannot cooperate with a country, which has in the past exploded a nuclear device. (India has done this is 1974 and hence this waiver is crucial for India)

2) The US will engage in civil nuclear cooperation only if the country's facilities are completely under the IAEA. (The waiver now enables the US to go in for cooperation with respect to civil nuclear fuel even though India has a strategic programme)

3) It should not have a programme for the development of nuclear weapons.(But India has a nuclear weapons programme and the world is aware of it)

In the debate surrounding the deal, the significance of the waivers has not been emphasized enough. India is now the only country that in spite of having a nuclear programme has civil nuclear energy cooperation with the US. This in turn means that all other countries might give similar waivers, which also includes the NSG. Hence, India can engage in civilian nuclear energy cooperation without having any cap on its nuclear weapons programme.

The deal is important to India because of its energy deficit that exists in India. If it aims to grow at the rate of 9-10 percent annually, India needs to boost its energy supplies. India has well-established infrastructure in the nuclear sector and has scientists that are well-trained. With the help of adequate energy resources, it can do well for itself. Another reason why the deal is important arises out of the fact that the technology-restrictions regime that started after 1974, is in place even today. It started as being nuclear-specific and then went on to cover the dual use of nuclear energy also. With this understanding, India was constantly denied high technology.

The significance of the deal extends also to beyond the nuclear sector. As India goes into a higher level of growth, developmental prospects are ever increasing. The US legislation does not bind India, as it is a part of legislation in the former. In fact, the legislation will provide India with the legal framework for the 123 Agreement.

There are some genuine concerns but there are also some that should not cause such worry. The law introduces a limitation on exporting reprocessing equipment and heavy water plants. What is to be understood is that this limitation applies to any state and not only to India and hence is not discriminatory. It is possible to overcome this with the help of multinational agreements. However, this is not crucial to India, as our reprocessing facilities are fairly well developed.

However, the reprocessing of spent fuel is an issue. No government wants to face the situation that the Indian government did with the Tarapur plant. India cannot afford to have this situation arising again. Nothing in the legislation bars the reprocessing of spent fuel. But in US law, there is such a restriction. Nevertheless, that too has exceptions like the EURATOM, Japan and Switzerland. It is crucial to negotiate this and it has been conveyed to the US.

The other issue is that of the principle of reciprocity. Though the Indian Prime Minister has stressed on this principle, it has somehow been subdued. Before the IAEA places any safeguards on the Indian facilities, all restrictions will be lifted. This will happen only following the signing of the 123 Agreement. There will, thus, be no violation of the principle of reciprocity. In addition, the creation of an India-specific additional protocol is in progress but it has not been finalized as it is taking place in a phased manner. The placement of Indian facilities under safeguards will happen gradually and not immediately. The NSG is also adjusting its guidelines under the 123 Agreement.

The issue of "certification" has now been solved as the word has been removed from the text of the legislation. Although "annual assessment" amounts to the same thing, the word "certification" means something specific under US law. This is therefore, not a concern anymore.

Although the issue has been raised that this legislation does not recognize India as a nuclear weapons power and that it reduces India's status, the legislation actually provides permanent waivers to from any such clauses. The US acknowledges the most important attribute of a nuclear weapons power. Though there are clauses encouraging India to cap and eliminate its nuclear weapons, it is not a condition but only a recommendation. There is the recognition that India is a country with nuclear weapons and that this state of affairs is unlikely to change.

The issue of perpetual safeguards has also been raised. The US administration has to ensure that India does not have more fuel than is necessary for its operations. It must also ensure that apart from the US, there is no other source for any such fuel coming into India. Thus, the US administration has made fuel supply reassurances, which will be incorporated in the 123 Agreement. The acceptance of perpetual safeguards is parallel with the supply assurances. Although it has not been spelt out, India retains the right to take corrective measures.

On the issue of the fissile material moratorium, it must be noted that it is recommendatory in character. Although the partner country should not be a nuclear weapons power, there is a clear recognition that India is one. Despite the desire of the US administration, India is unlikely to accept a cap on its fissile material production, except as a part of a multinational agreement.

A nuclear test by India will lead to the immediate cessation of fuel cooperation. The unilateral moratorium will become legally binding. India has conveyed to the US that it is not happy with a moratorium becoming legal in nature. Amongst the three waivers, the one regarding nuclear tests is retrospective in nature, not prospective. It is difficult for the NSG member countries and the US to say that although India has not taken up this course, they will give India a waiver. Such expectations would be unrealistic.

If such a situation arises when India has to conduct a nuclear test, then there will be a consensus not only in terms of civilian nuclear energy cooperation, but also in terms of access to technology and other areas of trade. As India has adopted a strategy of globalization, there will be an increase in interaction and interdependency will increase. The amount of risk will also increase. This will not be limited only to the nuclear sector. If India tests, it should be ready to face the consequences, as was the case with the 1998 tests. The important difference is that it is not undertaking a legal commitment and hence there will be no violation of any international commitment.

As far as end-use verification goes, it has an additional application of safeguards that goes beyond the IAEA safeguards. This will imply IAEA verification to ensure that dual-use technology is being used for the purpose for which India has acquired it. This does not imply inspection by any American personnel.

Lobbying is taking place with the NSG to alter its guidelines. India is also negotiating safeguards with the IAEA. The step taken by the US Government is the first most important step.

Questions and Answers

• With the safeguards being applied, there will be increased costs. Has there recently been an evaluation of the cost-benefit ratio?
  Essentially this deal means opening up reactors for engaging in international cooperation. The reactors built under foreign collaboration or those that will receive fuel from abroad will be under safeguards. But the indigenous reactors will be entitled to receive fuel. Therefore, in a cost-benefit analysis, this is definitely a big plus.

• Regarding technology denial, there has been no removal of entities from the list. Instead, there has been a policy of licensing in place.
  This is not true. In fact, most industry insiders have been saying that since 18 July, instead of denial there are now more approvals and not only in the US but also from other countries. Thanks to 18 July, India could also participate in the International Thermonuclear Energy Reactor (ITER) project. This is important for the future. As regards the entity list, not all have been removed but certainly some have been. The feedback is positive. There has been a major significant change and there is now no limit on things like high technology transfer.

• Will the deal be disrupted once the current US political regime changes?
  On the question of regime change, noting that the Democrats are becoming more influential, India has been constantly engaging with democrat leaders. In a conscious decision not to be partisan, the entire political spectrum has been covered. If one looks at the voting list, one sees that the bipartisan support has been fairly strong. Also, the fact that the US has passed permanent legislation augurs well for the future of this deal.

• Although India is restructuring its relations with the United States, it would be in greater interest of India to be able to stand on its own. What are India's priorities in the present situation? Given that it has invested so much political capital in it, will India pull out of the deal, if in future it feels the deal is not in its interest?
  There has been extensive debate on this and there are concerns that are important to address. If at any India feels that the deal is not in its interest, then however much political capital might have been invested, India will walk away from it.

• What is the status on the 123 Agreement? Are there more tough obstacles on the way or is it going well?
  The status of the negotiations on the 123 Agreement is that they are ongoing. Certain important issues have to be addressed like the reprocessing of spent fuel and how to treat the moratorium.

• How will the treaty address India's energy independence? Will the three-stage programme be facilitated and should the addition of this clause be prevented?
  On the issue of energy security, the integrity of the three-stage programme is in no way affected by this deal. The indigenous R&D programme has a certain integrity and hence, this has been kept out of the deal consciously.

• How can one say that there are no limitations on the strategic programme when testing itself is a problem? The scientific community is divided on the issue.
  Even otherwise, testing under the inspection regime is not possible. Even though India is not a signatory of the CTBT, in concept, it is a strong advocate of it. India has not signed it because of it being discriminatory like the NPT, but its position on that has not changed. It remains an article of faith for India. The scientific community might have its views but it has to be remembered that testing is primarily a political decision.