Report of the Seminar held at the IPCS on 18 May 2007

Chair:
Amb Lalit Mansingh, former Foreign Secretary and Ambassador to the United States

Panelists:
Prof P R Chari, Research Professor, IPCS
Prof Bharat Karnad, Professor, Centre for Policy Research
Prof R Rajaraman, Emeritus Professor, Jawaharlal Nehru University
Dr Reshmi Kazi, Research Fellow, IPCS

Amb Lalit Mansigh

The Indo-US nuclear deal stands is at a crossroads. The United States and India have during the last two years narrowed down their differences to four major issues. While there has been remarkable progress, these major issues need serious attention before the deal fructifies.

Dr Reshmi Kazi

The Indo-US nuclear deal after 22 months of its inception has entered the final lap before it comes into force. There have been "substantial" changes in the language of the Hyde Act and the manner that it addressed many but not all of the key concerns of India. For resolving these differences, India has to conclude a bilateral 123 agreement with the US, engage the IAEA, and seek changes to the rules of the 45-member NSG. In December 2006, both the Senate and the House reconciled their differences on the S.3709 bill and passed it with overwhelming bipartisan support. The most important gains from this reconciliation process so far are the following:

• No intrusive inspections by the US

• No annual certifications

• Sequencing issues addressed

However, crucial differences remain and these are to be negotiated and resolved in the 123 agreement. There are five major stumbling blocks:

1. The Return Clause: It gives the US the right to require the return of any nuclear materials and equipment transferred and any special material produced by their use if India detonates a nuclear explosive device. This condition pertains to any agreement for civil nuclear energy cooperation with a non-NWS. Enforcement of this provision, in full or part, would lead to heavy financial losses from the closure of the nuclear reactor and in returning transferred nuclear materials and equipment to the US. This is not acceptable to India.

2. Reprocessing of Spent Fuel: The US forbids the right to reprocess spent fuel to India, but not to those countries that have placed their reprocessing facility under IAEA safeguards. India has not placed the Kalpakkam reprocessing plant and the Fast Reactor Fuel Reprocessing Plant under IAEA safeguards. Reprocessing of spent fuel is essential for India especially in a future scenario when it will be importing reactors and fuel for its civil nuclear programme. A situation where India can neither reprocess spent imported fuel nor return it to the original suppliers is clearly undesirable.

3. Testing: Under the terms of the 123 agreement the US and NSG members would cease to transfer any items of technology controlled by the NSG Trigger List, if India were to conduct another test. India has unilaterally declared a moratorium on further testing in 1998 after its nuclear tests. However, India's voluntary moratorium cannot foreclose the option for a future government to test if national interests so demand. India is not in favour of converting its unilateral moratorium into a bilateral legality. Besides, the condition regarding testing is viewed with suspicion as a ploy to force India's entry into the CTBT by the backdoor.

4. Lifetime Fuel Guarantee: The US assures the reliable supply of nuclear fuel on a timely basis and on the conditions specified in the 123 Agreement. This is already part of the US 123 agreement. India fears termination of this cooperation agreement in case of a nuclear detonation.

5. Fallback Safeguards: 123 Agreement stipulates that there will be fallback safeguards initiated by the US if the IAEA fails to implement its own safeguards. India is in favour of India-specific safeguards and does not want to place its civilian nuclear program under any US safeguards.

Prof PR Chari

A lot of skepticism remains on the deal. The initial doubts on the deal stemmed from the differences between the Democrats and Republicans and the strength of the non-proliferation lobby in the US. Later, a more pressing concern was whether the deal would be acceptable to the Indian Parliament. The stock of natural uranium required to sustain India's heavy water programme is not adequate. India also lacks sufficient light enriched uranium for its light water reactors, despite the Atomic Energy Commission (AEC) working in this area for over three decades. What is more important is that India needs design information on fast breeder reactors. There are several technical problems associated with up-scaling a 13MW or 15MW experimental fast breeder reactor to a 500MW prototype reactor. Hence, India entered into this nuclear deal from a position of disadvantage, the responsibility for which falls on the AEC. India's position is further affected by the untimely shenanigans of the Cirrus Corporation. The current situation is that a contention obtains between Prime Minister Manmohan Singh's statement in Parliament on 17 August 2006 and the Henry Hyde Act of December 2006, which lays out the battleground for the 123 Agreement.

Incidentally, the Henry Hyde Act has no clause providing that it supersedes other US legislation like the Iran-Libya Act, which prohibits trading with Iran, and the Atomic Energy Act that requires automatic cessation of cooperation if a country explodes a nuclear device. Hence, the 123 Agreement has to fall in line with the provisions of the Henry Hyde Act. Another noteworthy aspect is the diminishing authority of both President Bush and Prime Minister Manmohan Singh in their respective political situations. It is important to note that even after the exercise of the Presidential waiver in nuclear matters; the Congress retains the right to review the situation.

What are the lessons to be learnt from this episode? First, the US cannot keep its Congress or India its Parliament ignorant about the precise nature of national commitments undertaken. The fine print should have been explained before the agitation began against the Indo-US nuclear deal. Second, the Ministry of External Affairs (MEA) and the AEC need to get their act together. What appeared to be an orchestration between them in the initial phases turned out to be a state of confusion. Finally, four crucial questions remain to be addressed: One, was the Indo-US nuclear deal expressly designed to acquire the status of a nuclear weapon state? If that be so, then the objective has not been achieved since "a state with advanced nuclear technology" is not the same as nuclear weapon state. Two, how important is access to enrichment, reprocessing and heavy water technology? The original compulsions informing the Indo-US nuclear deal were access to natural uranium, LEU and design information to upscale the EFBR to PFBR and commercial scale FBR. Three, how essential is the need to reprocess plutonium from imported reactors for breeder and later for thorium-based reactors? Are the indigenous reactors enough for the purpose? There is a need for transparency here. And four, does India need to test or is this positing as a sovereignty issue? Transparency on the contours of the credible minimum deterrent will make this issue clearer.

Prof Bharat Karnad

The problem confronting the Indo-US nuclear deal at present is that most of the differences in the deal remain. It is against India's national interests if New Delhi gives up its position and accepts the US clauses and provisions.

What is the operative part of the July 18 agreement? It states that India will undertake the responsibilities and practices of a NWS in return for the benefits and advantages enjoyed by the US. As stated by our former Foreign Secretary, Shyam Saran, a state with advanced technology is tantamount to the fact that India has been accorded a NWS status.

There is a fundamental difference between Homi Bhabha's policy of growing science and the policy of importing science. The process of growing science does not involve a jump from the base level to the most advanced aspects without undertaking the intermediate trial and error methods. Cutting edge technology is not given by any state that acquires it for the obvious reason that in the present day, the technology edge sets nations apart. The technology that would be handed over, therefore, will be second- or third-rate.

On the issue of testing, it is absolutely essential for India to have reliable, proven, safe and certifiable thermonuclear weapons. At present, the only certifiable and verifiable weapon that India possesses is the 20KT fission device. Simulations cannot provide the physical verifiability of the new weapons. Pakistan was given proven designs and explosion data by the Chinese that were essential to improve its weapons at the margin. No nation can be expected to give India such data or designs. India has to develop that technology through successive trial and error methods.

There are other objections to the Henry Hyde Act. Under Section 115 of the Act, the US has accorded the US National Nuclear Security administration a role to monitor India's nuclear facilities and activities. Section 109 provides for attempts being made to suborn Indian nuclear scientists. In a hearing in the Senate held in April in 2006, Condoleezza Rice talked about using and tapping India's nuclear high technology talent using this deal. If India still goes for the deal despite things being so clearly being against it, then it must be ready for disappointment in the future.

Prof R Rajaraman

India has been driving a hard bargain vis-?-vis the Indo-US deal. While a different agreement may or may not be feasible many years later, time is running out for this particular agreement. If India thinks that this Agreement will make matters worse, then it must abandon it now. But, to make that logical judgment, India must compare what it will get from having this deal with where it will be by not having the deal. While India should be free to change the 18 July agreement if it is not in its interests, if it abandons the deal then it would continue to remain where it is today. If the deal fructifies, it will release India from sanctions, not only by the US, but also by other NSG countries. Russia and France are already favourably disposed to give India nuclear reactors and technology, but only if the Indo-US nuclear deal goes through. Hence, the deal is not just about the US, but a step towards having a relationship with the whole world on nuclear energy.

There are three major contending issues facing the deal:

• Reprocessing of spent fuel;

• The availability of adequate fuel supply for future reactors; and

• India's freedom to conduct nuclear tests in the future

If India can neither reprocess spent imported fuel nor give it back to the original suppliers, then India will be stuck with tons of radioactive spent fuel, as is happening in Tarapur. This is clearly not desirable. Hence, if the US concern is only that India should not use their fuel and technology to make weapons, they should really find a way around their laws and permit safeguarded reprocessing. However, if the US is unable to accommodate India, that should not be reason enough to discard the whole deal. India must focus only on the actual constraints that the Americans want to write into the 123 document and not extrapolate beyond them to fret over imaginary contingencies.

If the deal gets completed and accepted by the US Congress and the NSG, then India will receive the first batch of reactors, not from the US, but from Russia or France. Both these nations are poised to enter into reactor trade with India, and preliminary negotiations have already been conducted. The US reactor industry cannot supply state-of-the-art reactors till some years from now. Russia may be willing to sell India both reactors and their fuel without such reprocessing constraints attached, or agree to take back their spent fuel so that India is not stuck with it. Hence, India must push ahead with the deal and start buying reactors from Russia and France. The Indo-US nuclear deal is a bilateral agreement and cannot prevent India from building its own re-processors and reprocessing spent fuel from a third country. It is only when India is ready to buy US reactors or fuel that the 123 Agreement's restrictions come into play. Moreover, if the US does not allow reprocessing of the fuel it supplies that would only leave their reactor manufacturers at a commercial disadvantage.

The 123 Agreement cannot prevent India from testing; that will remain a sovereign right. If India needs to test, it will be contingent on the situation when such a decision will be taken. Further, this does not imply that all nations will react like the US and stop nuclear commerce. If India wants to test in the immediate future then negotiating the current deal is not worth the trouble.. If India wants to keep open the option of testing sometime in the future, then it makes sense to go ahead with the deal now, and enjoy its benefits for as long as they are available.

The deal involves more financial rather than national security risks. Reactors cost millions of dollars each. India must not invest huge funds only to find later that cooperation has ceased and India is stuck with reactors with neither fuel nor spare parts. Three steps should be taken in this regard:

• India must not take the NSG for granted even if the Indo-US nuclear deal goes through. India must lobby with them to ensure its exemption. India must also make sure that there is no watertight link forcing all countries to follow suit if the US were to re-impose sanctions.

• Whenever a reactor purchase is negotiated with France or Russia, India must insist on guarantees for the reactor's fuel and adopt a sensible policy regarding its spent fuel.

• While negotiations with IAEA should proceed full steam, a draft of the safeguards agreement may have to be made available to the US Congress and the NSG. India must formally sign the IAEA agreement only after the deal has been approved to the satisfaction of all the parties - India, US and the NSG.

DISCUSSION

India's Options on Testing

India does not want to enter into any kind of legal commitment that would foreclose her options for testing in future. But any testing in future would entail a much tougher cost-benefit analysis on India's part. The right to test is a sovereign right and if India at any point of time feels that testing is in its national interests, then India should go for it. Moreover, nothing in the 123 agreement takes away the option of testing. It only talks about the aftermath of testing. The present self-imposed moratorium should be assessed while taking into account India's necessity to test.

The US cannot prevent testing since it is a law there. Hence, India should be careful while drafting the language of the agreement to ensure that its testing options are not limited. India has made it clear that it cannot accept 'Fallback Safeguards.' The issues of 'reprocessing' and 'return' still remain to be resolved. Hard bargaining is required and a compromise might be in the offing. Increased transparency is essential here.

Strategic Dimensions of the Nuclear Deal

The deal has to be looked at from a larger strategic angle, and it is pertinent to know why the US is offering India this deal. There is a significant change in the US policy towards India and is now ready for strategic partnership. The success of India's diplomatic moves, its economic growth and the role of the NRI community is responsible for this. It was India who brought nuclear cooperation, trade and technology transfer into the strategic calculations. India should accept or reject the deal after taking into consideration its wider strategic benefits. Lifting of the three decades-old sanctions on dual-use technology transfers would benefit India as the latter would be able to access advanced technologies in other areas as well. However, it is not certain that the US would share cutting-edge technologies with India. Americans are looking for a long-term partnership. India, in turn, is also seeking short-term advantage.

Immediate strategic issues have been taken care of by the Indo-US nuclear deal and Indian negotiators have extracted much more than expected from the US. The role of nuclear weapons and its deterrent value in future needs to be debated and this is a debate that is lacking in the country. There is a need for greater transparency within the decision making process as well. To ensure a credible deterrent system, effective delivery systems are also required.

The Nuclear Supplier Group (NSG)

Changes would be effected to NSG laws only after the deal is in place and India has signed an agreement with the IAEA. The contention that India is free to enter into bilateral agreements with other NSG members for technological cooperation is problematic as the NSG would move only when the 123 Agreement is concluded. The US can exert its influence on most NSG countries. Even if there is a separate bilateral agreement in place, nothing will stop the US from reopening the entire deal. China, a NSG member, has to be taken into account even as opposition within the NSG group has been decreasing. The US has committed to persuading its friends, but India is also trying to generate a consensus to obtain India-specific concessions from the NSG.

Domestic Political Consensus

The left parties in India have expressed concern over the deal. They have an apprehension that there might be some ulterior motives in the deal but they have never questioned the deal as such. Therefore, they should not be misunderstood. They have aired their concerns about the sovereignty and the independence of the foreign policy of India but the Indian Government has not done enough to explain the benefits of the deal to them which accounts for these protests. India should sign the deal only if it is advantageous to us.