U.S.-India nuclear deal drifts dangerously

The U.S.-India nuclear deal, hailed as the centerpiece of a new partnership between the world’s two most populous democracies, has drifted dangerously since it was signed in 2008, analysts and former negotiators from both countries say.

The risk is that other countries, particularly Russia and France, might benefit from all the hard work that the United States put into the deal.

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.

Waning enthusiasm

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.

Despite India’s intention to join an international treaty that would restrict liability claims on suppliers, U.S. companies and their insurers are worried that Indian law would still take precedent, and American corporate officials are adamant that the law needs to be changed before they can do business here. The question is whether Singh, who is on the defensive over corruption charges against the government, can amend that legislation.

So while General Electric and U.S.-based, Japanese-owned Westinghouse Electric sit on the sidelines, France’s Areva and Russia’s Rosatom are moving ahead in inking deals to build reactors in India.

“The American things are moving slow,” said Anil Kakodkar, a former chairman of India’s Atomic Energy Commission and a key negotiator of the nuclear agreement. “But it is not India’s fault. We have done everything we are supposed to do.”

A lopsided relationship

In a sense, the stalling of the nuclear deal is indicative of a broader problem in the U.S.-India relationship, Burns and other U.S. analysts said, with Washington making most of the concessions and India seeming less engaged.

President Obama has wooed India assiduously, even supporting its bid for a permanent seat on the United Nations Security Council. But there was enormous disappointment in Washington when India did not shortlist any U.S. companies when deciding on a major overhaul of its fleet of fighter planes this year, a deal worth billions of dollars that could have heralded a new era of defense cooperation.

With its economy and its demand for energy growing rapidly, India wants to raise its nuclear power generating capacity from the current 5,000 megawatts a year to more than 60,000 megawatts by 2032.

But there is a growing sense that this target might be overly ambitious.

In sites set aside for U.S. and French reactors, farmers have refused to sell their land. To allay the fears, Singh ordered in April a safety review of all existing reactors, increased compensation money for farmland and pledged to create an autonomous atomic regulatory board to oversee the plants.

Even so, about 250 farmers stormed out of a recent meeting with officials called to discuss compensation for land meant for U.S. reactors in Mithi Virdi, in western India.

“It is fertile land, and they don’t want to part with it,” said Krishna Kant, an anti-nuclear campaigner in the area.“Now, when I go to the villages to meet people, they say, ‘Look what has happened in a rich country like Japan.’ ”

Complications abound

There are other hurdles, too. New Delhi has not given an assurance to Washington that Indian private companies will not re-transfer American nuclear technology and information to others, a requirement under U.S. law.

And before India can buy American and French reactors, New Delhi has to sign a nuclear cooperation deal with Japan. Those reactors use Japanese parts and technology, which cannot be supplied until Japan changes its law to allow nuclear trade with India.

The situation became more complicated last month when the Nuclear Suppliers Group, which has about four dozen members, voted at a meeting in The Hague to bar access to sensitive uranium enrichment and reprocessing technology, which can be used to make atomic bombs, to countries that have not signed the Non-Proliferation Treaty.

In 2008, the group gave an exemption to India, but the decision last month was seen in New Delhi as a sign that it was still not trusted.

Kakodkar called the latest NSG decision a “betrayal” and a huge setback to nuclear commerce.

“The world needs to understand our sensitivities,” Kakodkar said. “We cannot be made a pariah all over again.”

Simon Denyer is The Post’s bureau chief in China. He served previously as bureau chief in India and as a Reuters bureau chief in Washington, India and Pakistan.
Rama Lakshmi has been with The Post's India bureau since 1990. She is a staff writer and India social media editor for Post World.
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