The new deal: When Bush comes to shove

India must treat the nuclear agreement with the United States as a standalone deal and reject the idea of any broader fusion of strategic interests. From Iran, Iraq and Palestine to Korea and Japan, Washington 's policies have emerged as the principal threat to regional stability. What is bad for Asia cannot possibly be good for India.

March 11 - 24, 2006, Volume 23 - Issue 05

Frontline

COVER STORY

The new deal

The nuclear agreement with the United States has many commendable features, but the problem is that the Bush administration does not like to see it as a standalone deal.

SIDDHARTH VARADARAJAN

A LIE, Mark Twain said famously, can travel half way around the world while the truth is still putting on its shoes. With the offensive reality of Guantanamo Bay and Abu Ghraib sequestered thousands of miles away, United States President George W. Bush began his speech at the Purana Qila in Delhi on March 3 with a spectacular falsehood. The U.S., he said, was a "brother" to India "in the cause of human liberty".

With a start like that, things were bound to go rapidly downhill, and they did.

Describing India as a "natural partner" of the U.S., Bush said,

"[T]he partnership between our free nations has the power to transform the world... As a global power, India has a historic duty to support democracy around the world... India's leadership is needed in a world that is hungry for freedom. Men and women from North Korea to Myanmar to Syria to Zimbabwe to Cuba yearn for their liberty. In Iran, a proud people is held hostage by a small clerical elite that denies basic liberties, sponsors terrorism, and pursues nuclear weapons."

Ordinarily, one could have dismissed these statements as the rhetorical flourishes of a man whose belief in the redemptive power of Neocon theology is almost as potent as the military forces he commands. But this was no ordinary occasion. Just a day before, Bush had told journalists that the world had changed and that he was willing to turn his back on 30 years of nuclear non-proliferation policy in order to sign an agreement on nuclear cooperation with India. And now it was time to spell out in the clearest possible language the manner in which Washington intended to collect on this `debt' in the near future.

As a standalone deal, the Indo-U.S. nuclear agreement - in the form in which it currently stands - has much to commend it. To be sure, the terms of separation between the civilian and military parts of the country's nuclear programme will involve major expenses and there is still the battle on "India-specific safeguards" to be fought. And yet, the integrity of India's civilian research and development programme in the nuclear field has been protected - this despite great pressure being brought to bear on its fast-breeder reactor and fuel-cycle related facilities. If all goes according to Bush's plans now, the U.S. Congress will presently amend the Atomic Energy Act along the lines suggested by the Bush administration and the Nuclear Suppliers Group its export rules, in order to make a one-off exception for India. At that point, provided a proper safeguards agreement is worked out, India would be able to access imported nuclear fuel and equipment as an "additionality" to both its indigenous civil nuclear programme and its imports on the hydrocarbons front. Any way one looks at it, that would be a major political and diplomatic achievement for the country - and the Manmohan Singh government.

The only hitch is that the Bush administration does not like to think of the nuclear agreement as a standalone deal.

Indeed, the principal reason why Bush and his senior advisers were prepared to accept most Indian objections on the separation front is that they recognise the strategic significance of the "partnership" they are trying to build with India and had they insisted on certain conditions, the deal would have fallen through.

Broadly speaking, there are four distinct but inter-related factors underlying Washington's desire to build a strong partnership with India centred around civil nuclear and conventional military cooperation with India.

First, the growing economic and strategic importance of India in a world that is in transition from one order to another. For the U.S. - which intends to weather this transition (and the rise of China) with its hegemonic power intact if not augmented - nuclear cooperation with India forms the bedrock of a wider set of strategic interactions aimed at harnessing Indian strategic capabilities. Indeed, strategic factors have over-determined the U.S. approach to the Indian nuclear question to such an extent that India's nuclear weapons are today considered an asset for the U.S. rather than a strategic challenge. This has enabled the realists in the U.S. policy-planning system to overcome the non-proliferation theologians and push for the mainstreaming of India's nuclear capabilities even if this means accepting many of the conditions laid down by Indian nuclear scientists, such as excluding the fast-breeder programme from the purview of international safeguards for the time being.

The Indian nuclear weapons capability has not been capped, but the cost to the Indian establishment of maintaining or expanding it further has been raised - which will provide the U.S. enough of a guarantee against India eventually posing a threat to its interests.

Second, in line with the changes in U.S. force deployment and basing patterns around the world and Asia, as well as the foreseeable increase in offensive missions the U.S. Armed Forces are likely to undertake on the Asian landmass, building a strong military relationship with India is absolutely vital. The idea is that the U.S. could eventually draw upon Indian capabilities to outsource activities at the lower end of the military food chain, such as peacekeeping, maritime patrolling and disaster relief, thereby freeing its own forces for the "high-end" task of waging (pre-emptive) war. This means increasing the "interoperability" of the two armed forces through joint exercises, training and use of equipment. It is possible the Bush administration regards the nuclear deal as a sweetener that would ensure progress on the military front.

Third, the rise of India and China is exerting tremendous pressure on the international hydrocarbon market as far as the U.S. and Western oil majors are concerned. This is not so much owing to the current levels of demand - indeed, it is a fallacy that demand growth in these two countries is an important, let alone pivotal, cause of the recent upward trend in international oil prices - as to the hedging strategies China and India have embarked upon. These strategies are aimed at securing a major upstream presence through equity oil acquisitions as well as the establishment of new transportation infrastructure such as transcontinental and transregional pipelines. India, in particular, is seriously examining the prospects of a strategic natural gas pipeline from Iran via Pakistan. If completed, such a project would fill a major gap in the emerging Asian energy architecture and open the possibility for the generalised outflow of Central Asian and Caspian oil and gas southwards towards the Persian Gulf and thence to Asia, rather than exclusively westwards via U.S.-promoted pipelines such as Baku-Tbilisi-Ceyhan. Against such a backdrop, providing India a viable nuclear energy option makes eminent sense.

Fourth, the U.S. nuclear reactor construction industry has been in the doldrums since 1976 and is looking to China and India as major sources of new demand. Although the Indian nuclear establishment would be more comfortable sourcing reactors from Russia or France, it is highly unlikely that the lifting of the embargo on civil nuclear cooperation with India at the urging and initiative of the U.S. will not result in some contracts going to American companies. At the very least, as noted above, the U.S. would certainly be looking forward to leveraging the nuclear agreement to secure a greater share of the growing Indian arms market.

The fact that none of these four reasons sounds particularly appetising - indeed all suggest that the offer of civil nuclear cooperation comes with a collateral price tag in some other area - is by itself not sufficient grounds to reject or oppose such a historic deal which offers the Indian nuclear industry a chance to end more than 30 years of isolation. But they do suggest the policy areas where utmost caution is required. If the unreasonable expectations of the U.S. - on the strategic front, the energy security front, and the trade front - are met fully or even partially, many of the gains stemming from the resumption of civil nuclear cooperation will be lost.

Simply put, India must reject the notion that there can be any trade-off between the prospects of greater civil nuclear cooperation and the prospects of cooperative hydrocarbon ventures of the kind the country is looking at with Iran, Pakistan and even China. That the U.S. is looking at these two as a trade-off should be amply evident both from the timing of Secretary of State Condoleezza Rice's initial offer of an energy dialogue in March 2005, as well as from the pronouncements made since then by her, by U.S. Ambassador to India David Mulford, and by sundry officials and legislators in the U.S. Bush's remarks in Islamabad on March 4 that the U.S. did not have any problem with the Iran pipeline but only with Iran's nuclear ambitions is not a shift in line as some have suggested but a clever reformulation of the same objection.

Oil, and particularly natural gas, will continue to be an important part of the Indian energy mix in the short- and medium-term and nuclear power can be seen as a substitute only in the long-term. Up until the middle of this century, then, finding and securing new sources of hydrocarbons will have to be a key aspect of India's quest for energy security. Given the enormous reserves of natural gas in Iran, that country is a natural energy partner for India and multiple forms of transport infrastructure - including pipelines and liquefied natural gas (LNG) terminals and tankers - will be needed between the two countries. The presence in between of Pakistan is not a problem but an opportunity for India because involving Islamabad in a trilateral or even multilateral energy grid is an excellent way of raising the level of economic interaction between the two neighbours who have traditionally been at loggerheads with each another.

Ever since Manmohan Singh came under fire for suggesting in an interview to The Washington Post in July 2005 that the Iran pipeline might never take off, his government has been careful to reiterate its commitment to the project provided it is found to be financially viable. While financial viability is important, particularly when comparing alternative modes of transportation or indeed imports, there should be no underestimation of the political benefits the pipeline might also bring.

These benefits will accrue in three distinct and mutually reinforcing ways. First, India and Pakistan will experience the necessary burden of mutual dependency for the first time in decades. Second, Iran will get to develop a stable and secure export market for its natural gas. Third, the Iran-Pakistan-India pipeline might become the catalyst for a wider network of pipelines criss-crossing the Asian heartland and connecting areas of supply with areas of demand in a manner unmediated by outside influence.

However, the U.S. is very clear that Iran is not a country that anybody should be doing business with, least of all India. And to a considerable degree, it has already boxed India into a corner as far as the Iranian issue is concerned. While India and the rest of the world have legitimate concerns about the possibility of Iran acquiring nuclear weapons, the way to resolve these concerns is through dialogue and diplomacy, not coercion and confrontation. Instead of becoming a party to the decision to refer Iran to the U.N. Security Council, India should have counselled restraint. But the fear of losing the nuclear deal pushed the Manmohan Singh government into endorsing the U.S. approach.

The danger is that India's action on the Iran question at the International Atomic Energy Agency (IAEA) might get converted into a general pattern of behaviour as the U.S. pushes its other pet projects. While in Delhi, Bush served notice on regime change in Cuba, Syria, Iran, Zimbabwe, Myanmar and North Korea. He also sought to undercut India's approach to the Nepal crisis. And there is the perennial question of what the emerging India-U.S. partnership might do to India's relationship with China.

Citing specious arguments based on `balance of power', a number of Indian analysts have begun exaggerating the areas where Indian and U.S. strategic interests converge. Nothing could be further from the truth. From West Asia to East Asia, the U.S. has emerged as the principal threat to strategic stability. Its policies of regime change, pre-emptive war and sanctions against states that refuse to accept its diktat, combined with permissiveness towards Israel, is degrading the security environment in Asia in a way that will adversely affect India's interests. Even as it looks forward to the implementation of its nuclear deal with the U.S., then, New Delhi must be mindful of the collateral damage its relationship with Washington could cause for itself and the region.