The landmark agreement was supposed to allow the sale of nuclear reactors and fuel to India, even though the country has nuclear weapons but has not signed the Non-Proliferation Treaty. Advocates of the deal said it would bring tens of billions of dollars in business to the United States and create thousands of jobs, while also cementing a new partnership between the two nations to counter China’s rise.
The deal, symbolic of the new alliance, is not in any political danger. But U.S. companies have not sold any reactors or equipment to India. American nuclear-fuel firms, which face no legal or policy hurdles, also have not begun selling to India.
The agreement, personally propelled by President George W. Bush and Indian Prime Minister Manmohan Singh, overcame enormous opposition from the nonproliferation lobby in the United States and from some Indians, who said the conditions attached to the deal undermined their country’s sovereignty. But once the ink was dry and the hard work of implementation began, the momentum stalled.
India’s enthusiasm for nuclear power has been dented by the nuclear disaster in Japan and by problems in finding available land to build reactors. Meanwhile, onerous conditions imposed by the Indian Parliament on suppliers of nuclear equipment have tilted the playing field away from private-sector U.S. companies in favor of state-owned companies from Russia and France, analysts say.
“You can see a possible outcome where the U.S. has expended most of the diplomatic capital but companies in other countries are the main beneficiaries,” said Richard Fontaine of the Center for a New American Security in Washington.
As Secretary of State Hillary Rodham Clinton visits India this week, the deal’s supporters hope she can reignite India’s enthusiasm to clear the remaining hurdles.
“The Obama administration has done everything it can to implement the agreement,” said R. Nicholas Burns, who was an undersecretary of state in the previous administration and spent three years negotiating the deal. “The problem, from my perspective, is on the Indian side. We haven’t seen the same degree of political commitment to follow it through.”
Singh put his government’s survival on the line to pass the deal. But in a country scarred by the 1984 Bhopal gas disaster, which claimed more than 15,000 lives, he was powerless to prevent the passage last year of a law that would make suppliers of nuclear equipment liable for massive claims in the event of a nuclear accident during the reactor’s lifetime.
That raises the risk of doing business in India to levels that U.S. private-sector companies and their insurers cannot accept but that state-backed companies in Russia and France, with the much deeper pockets of their respective governments, might be able to live with. And it puts India far out of step with other countries, which hold plant operators solely liable.