Now this is the third article of mine in the series on Indo-US Nuclear deal. I had highlighted the significance of getting the deal through the NSG hurdle and India has done it! It was hard-earned diplomatic victory. Yes, I do have certain reservations about the language of the deal; but the bigger picture I see, allows me to call it a ‘victory’. Even though quite a few contradictory interpretations of the final NSG declaration run against each other, the fact remains that India has managed to cut the deal without any major amendments in the original draft.

The NSG Meet & China’s backward summersault

NSG waiver has not come so easily. Even for US, it had to pull all the right strings at right moments and put pressures from highest levels to make countries like Austria, Ireland budge. There are also talks of America cutting the side-deals with discontent countries, which is quite possible. Pranab Mukherjee’s Statement, stirring the diplomatic calculations and yet yielding nothing new, was timely indeed. Austria did oblige under US pressure and had to take resort to this statement to justify their subsequent approval to the deal and to hide the obvious discomfiture.

A consensus was said to be in place with China on this issue. So is China suffering from Multiple Personality Disorder? Of course China would have been happy to play spoil-sport; but at the same time did not want to be principal spoiler. Even though the last minute opposition from China was not so surprising, the way Chinese diplomats handled the entire issue looked a bit clumsy, to say the least. Was China banking on smaller nations to be lot more adamant? Did China discount the possibility of some side-deals being cut? Because at the end of the day, China did look isolated & dissenting from rest of the world, something it can ill-afford.

The Global Response

Indian media is all cock-a-hoop over the success of the deal; but foreign media remains skeptic. Some think India walked away with a ‘too-generous’, unfair & undeserving deal. Some say India is going to get lot of things in return of nothing. Many fear the collapse of NPT significance while others mull over its impact on South-Asian stability or the wrong signals it might send to Iran, N. Korea & Pakistan.

But there is no doubt that India deserved what it got. Its impeccable non-proliferation record has established its clean image as a key nuclear player and the deal has only seconded this fact. Why would India be compelled to sign NPT when it has never proliferated while China, an NSG member is a non-stop proliferator (in words of K. Subramanyan, our former defense secretary)? India has gained from the deal; but so have NSG and the rest of the world.

What happens if India tests nuclear weapons?

Now this is a question catching the public eye and at the root of domestic political opposition. The language of the final draft is ambiguous enough to allow for different interpretations. The whole draft is in fact lawyers’ paradise. The NSG members are pointing out that India’s unilateral moratorium has turned into multilateral legality and contending that it implies strict legal obligation, which is binding on India. In the event of India violating the pledge, India may again be isolated or even be left stranded after having done humongous investment in this sector.

Indian think-tank, on the other hand, is arguing that India’s ‘political promises’ on voluntary test moratorium are not in any way equivalent to legal obligations & commitments made by member states of NPT. So there is no ‘automatic termination’ of the deal if India tests nuclear weapons.

Now after having read the final version of the NSG draft and also individual drafts filed by countries like Japan, Germany etc, one would deduce that even though India is not exactly bound by strict legal obligations under the deal, the option of terminating the deal does remain open for NSG countries. And what is upsetting is the fact that India would be only ‘consulted’ in case of any future amendments in NSG guidelines, which is more like- India will be ‘informed’ about future amendments in guidelines. So if tomorrow, NSG decides to amend anything which runs against Indian interests, Indian government & businesses would have to comply with these amended guidelines without any concrete say.

Now as to question of nuclear test, why would India need to conduct one in first place? As mentioned in my previous article, we already have the technology to create nuclear weapons. We are committed to out stance of no-first use. If at all we are compelled to conduct any tests, that would be in extreme situations and in such cases, the NSG members would be sympathetic to the cause, I believe. So the possibility of India being ousted again seems almost non-existent.

What does India get?

Plenty. India is nuclear power. It has not signed CTBT, it has not signed NPT and yet India is no more a nuclear outcast. India enters nuke-trade without compromising its strategic (military) programme. Assured uranium fuel supply and permission to reprocess & recycle spent fuels are the important gains. Doors will be open for duel-use technologies.

Indian Business firms stand to gain as well. The deal will generate billions of dollars in lucrative contracts for the corporate members of the U.S.-India Business Council and the Confederation of Indian Industry. Companies like L&T, Reliance Energy (plans to invest 12,500 crores), TATA etc. have already declared their intentions to jump into the fray. Utility companies like NTPC & NPCIL would have a piece of cake too. In the long run, Indian companies, with their gained experience, can play trumps in ever-expanding nuclear energy domain across the world.

India aims at raising their nuclear energy percentage from 3% to 15% by 2020 by generating 52,000 MW of nuclear electricity (40,000 from Light Water Reactors, 10,000 from the present Pressurized Heavy Water Reactors and 2,000 from Fast Breed Reactors). At present nuclear reactors are working at only 55-60% of their capacity; this can be lifted to at least 90%.

Dual-use technologies:

The possibility of unhindered supply of nuclear fuel and the consequent nuclear energy implications are hogging the limelight. But this is going to take some time (at least 7-8 years). Liberation from nuclear ostracism has opened the doors for dual-use technologies and this has some immediate application.

So what is dual-use technology? It includes, among other things, software, chemicals, advanced lasers, computer & flight control equipments etc. Manufacturers & suppliers in these domains are refrained from trading these items with countries outside the purview of NPT. Why? Because even though most of the technologies are used for civilian purposes, possibility of their military or nuclear application (i.e. their dual-use) cannot be denied. The NSG waiver implies that India is now open for trade in these technologies even though it has not yet signed NPT.

This is going to have an immediate impact, according to Business Standard, on Indian Manufacturing, R&D and scientific programmes; also in the fields of IT, defense, space, pharmaceuticals. After Pokharan I, India was blackballed from access to this advance technology and now India sees quite a potential in this emancipation. Of course, to address the proliferation concerns, a proper legal framework needs to be in place and India will need to amend its Foreign Trade (Development & Regulation) Act, 1992. The proposal is already on the table in fact.

Geopolitical Impact

The Left parties in India are calling the deal a sellout and arguing that India’s foreign relations would be controlled by US. Of course the Left rhetoric need not be given too much of weightage. But the point needs to be discussed. Is India leaning towards US to the extent of losing part of its sovereignty? I don’t think so.

Manmohan Singh had assured the Parliament that India’s foreign relations will remain independent.  And interestingly while US is saying that the deal will help to rein in Iran’s nuclear programme, Indian government is busy strengthening its ties with Iran. Iran is in talks with ONGC, India to develop oil & gas reserves in the Caspian Sea.

So India is clearly going ahead with its own policy and US understands this.

What next?

The deal awaits the US- Congress approval. The attempt is also being made to bypass the 30-days ‘resting period’. This does not seem that easy and may or may not happen; but Bush should not find the task of getting the deal through too difficult now, with whole business lobby right behind the deal. And since US was made to flex lot of muscles at NSG meet, it simply cannot allow the deal to be dustbinned at this stage as that would be most ridiculous political imbroglio.

But if the deal gets stalled somehow, the delay might cost US. France & Russia are ready with their bilateral pacts with India and might walk away with early-bird prizes. France, for India is the most well-equipped country to help build advanced nuclear plants. There is of course gentlemanly understanding between India & US that US business groups should get a larger chunk of the cake; but still US’s urgency to pass the deal is quite understandable.

Word of caution:

Yet again, a word of caution! India might have walked away with the best deal possible. But the real responsibility begins now. India first needs a sound legal framework in place and that too very quickly to hasten up the process of foreign investment in this field. Experience of foreign companies in India has not been very rosy and India needs to address this conundrum immediately.

Nuclear energy is going to take some years to fruit. And the initial cost might be high. So India will have to look at other means of power generation, preferably the renewable ones. The right balance might just be the answer to India’s chronic energy riddle. So India, stand up, rejoice & get back to work!

Here’s Final Statement by NSG