Lifetime fuel guarantee remains a sticking point in `123' talks with U.S.

Differences on reprocessing right, language on testing have narrowed but there are still crucial obstacles to overcome in the bilateral nuclear cooperation agreement.

13 December 2006
The Hindu

Lifetime fuel guarantee remains a sticking point in `123' talks with U.S.

Siddharth Varadarajan

New Delhi: U.S. and Indian negotiators have managed to narrow some of their differences over the text of the bilateral Peaceful Nuclear Cooperation Agreement but differences still remain on a number of key issues.

When finalised, the agreement — also known as the `123 agreement' after the section of the U.S. Atomic Energy Act which mandates it — will have to be submitted to the American legislature for approval. Only after that can United States firms sell to India nuclear equipment, technology and material not explicitly barred by the agreement or the U.S. statute.

The two sides have held several rounds of discussion since the U.S. side presented its first draft of the agreement last March. According to officials familiar with the course of the negotiations, the areas where differences have narrowed are on India acquiring the right to reprocess spent fuel produced from imported U.S. reactors or material, as well as on avoiding a reference to India's adherence to its unilateral moratorium on nuclear tests as a condition for cooperation.

But on the issues of life-time fuel guarantees as envisaged by the March 2 joint statement and Indian separation plan, the exclusion of equipment and technology related to enrichment, reprocessing and heavy water, and the scope of end-use verification and fallback safeguards, major differences still remain.

Manmohan's statement

For the Indian side, the parameters of what the agreement must contain were spelt out by Prime Minister Manmohan Singh in Parliament on August 17. He said that "a reference to nuclear detonation in the [123] Agreement as a condition for future cooperation is not acceptable to us." He also made it clear that India would not settle for anything less than "full civil nuclear energy cooperation", including the right to reprocess spent fuel and access technology and equipment connected to the complete nuclear fuel cycle. Since the Henry Hyde U.S.-India nuclear cooperation Act does not grant India these rights, the Government hopes the 123 agreement will unambiguously address India's concerns.

On the issue of testing, the U.S. has proposed language which allows either side to end its cooperation citing "supreme national interests". The understanding is that for the U.S., this is shorthand for India conducting a nuclear test in the future. While Indian officials feel this formulation might meet the Prime Minister's stipulation that there be no reference to an "Indian nuclear detonation", there is concern about the U.S. also then insisting that India agree to return all U.S-origin facilities, equipment and materials, as well as their derivatives. The U.S. side says any return of exported items would be appropriately compensated but Indian negotiators are wary of acceding to any restitution clause.

Tarapur experience

Given the experience of Tarapur, where India has neither been allowed to reprocess the spent fuel accumulating there nor to return this fuel to the U.S., Indian negotiators are also insisting that reprocessing rights be an integral part of the 123 agreement rather than be granted in a subsequent agreement as the U.S. side had initially proposed. Under U.S. law, countries wishing to reprocess spent nuclear fuel derived from American imports must fulfil criteria spelt out by Section 131 of the Atomic Energy Act. This section also specifies a procedure for the return of spent fuel. According to Indian officials, the U.S. now sees the merit in one overall agreement and that the right to reprocess will figure in the 123 itself.

The one sticking point, however, is the conditions under which this would be permissible. The U.S. side is insisting on onsite verification of reprocessing going beyond the relevant International Atomic Energy Agency (IAEA) safeguards which are applied, say, when India will reprocess spent fuel produced by the Russian-supplied reactors at Kudankulam. In general, Indian negotiators are not inclined to allow the U.S. any access beyond what the End-Use Verification Agreement of 2004 already envisages — i.e. only to areas where nuclear material will not be present.

Citing the Kudankulam agreement, where India received sovereign and unqualified Russian guarantees for the lifetime supply of fuel for the reactors being imported, Indian negotiators have said a similar sovereign guarantee by the U.S. must be written into the 123 agreement if the March 2 joint understanding is to be fulfilled. The U.S. side, however, is only willing to provide guarantees against disruptions caused by market failure and imperfection and not the kind of unconditional guarantee India is seeking in exchange for in-perpetuity safeguards.

Finally, on the issue of "full" cooperation, as Secretary of State Condoleezza Rice testified in a written answer to Senator Richard Lugar on April 5, the Bush administration is clear that the 123 agreement "will not permit" the transfer to India of reprocessing, enrichment and heavy water technology and equipment. With Dr. Singh formally defining "full" to include these areas of cooperation, however, the Indian side says India cannot be party to a bilateral agreement which does not lift restrictions in all areas of civilian nuclear energy.