26 September 2008

Congressional riders turn 123 Agreement into lame duck

India can no longer hide behind the claim that “internal processes” within the United States are of no concern...

27 September 2008
The Hindu

Congressional riders turn 123 Agreement into lame duck

India can no longer hide behind the claim that “internal processes” within the United States are of no concern.

Siddharth Varadarajan

New York: The speed at which Capitol Hill moved may have surprised many but Congressional approval of the bilateral nuclear cooperation agreement with India – imminent at the time of going to press – comes laden with riders and conditions aimed at reinforcing a principal policy objective: how to ensure the Indian side doesn’t play the global nuclear field to the detriment of American economic and political interests.

Since the “internal communications” between different branches of the American government derogating from core provisions of the 123 are now embedded in the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act, New Delhi will have to take a tough call about whether and how it will sign and implement the bilateral agreement.

Hoping to avoid or postpone the inevitable unpleasantness that any reluctance to sign would bring, Prime Minister Manmohan Singh and his advisers are hoping President George W. Bush will bail them out by issuing a “signing statement” dissociating himself from some of the more distasteful Congressional edicts. But this is easier said than done, even assuming Mr. Bush violently disagrees with the riders that have been attached to the 123 Agreement in the first place. For the fact is that all that Congress has done is to embed the “authoritative representations” the President and his representatives made in written submissions prior to the agreement being sent up the Hill. It would be remarkable, indeed, were Mr. Bush to now declare that he will not be bound by the very representations he authored less than a fortnight ago.

A careful consideration of the Bill to approve the 123 Agreement reveals no less than nine specific problems with the draft language of the benchmark Senate version. Much has been made of the version tabled in the House of Representatives by Congressman Howard Berman. But other than largely inconsequential changes in four separate places, his version is a carbon copy of the disastrous Senate Bill whose eventual passage will render the 123 Agreement a lame duck from India’s point of view.

First, the Manmohan Singh-led United Progressive Alliance government had said all along that it shared the Opposition’s reservations about the Hyde Act passed by the U.S. in December 2006. A fair attempt was made to recover some ground in the 123 Agreement by balancing the Indian legal commitment to safeguards with the American legal obligation to ensure fuel supplies. When a skeptical opposition doubted whether such an agreement could ever be implemented, the UPA maintained that the 123 would supersede Hyde once it was approved by Congress and entered into law. That tendentious claim is now being given a very public funeral. The new Bill establishes the explicit supremacy of the Hyde Act over the 123 Agreement in Section 101(b) and reinforces this in the rules of construction in 102(d) when it says nothing in the Agreement should be construed to supersede the legal requirements of the Hyde Act.

Second, section 102(a) of the Bill says the 123's provisions have the legal meanings contained in the "authoritative representations" made by the president and his representatives. By stating so, the U.S. is formally entering a reservation about, inter alia, the nature of the fuel supply assurances contained in the agreement as well as on the ‘non-permanent’ nature of reprocessing consent rights. Once the Bill is passed and India signs the 123 agreement, it will be tantamount to accepting these reservations in international law. It is futile to think legally binding fuel assurances can be built into a contractual arrangement with American reactor suppliers like Westinghouse and GE. Besides, by accepting these reservations now, India will be in a weaker position to negotiate fuel arrangements in the future.

Third, the Bill reiterates in section 102(b) a particularly obnoxious provision of the Hyde Act that it shall be American policy to seek to prevent nuclear supplies to India from other countries in the event of the U.S. terminating nuclear cooperation with India for any reason. This is further aimed at making it difficult for India to look elsewhere once the U.S. decides to shut the door.

Fourth, the same section makes another declaration of policy -- that any fuel reserve provided to India pursuant to the Hyde Act must be “commensurate with reasonable reactor operating requirements”. Of course, this declaration of policy is superfluous since the Hyde Act itself spells this out explicitly via the Obama amendment. Once again, the net effect is to try and deny India the ability to create space for itself by building the kind of strategic fuel reserve envisaged by the March 2006 separation plan as well as the 123 Agreement.

Fifth, as provided for in section 204, the Bill seeks to the tie the entry into force of the 123 Agreement to a certification by the President that it is U.S. policy to tighten restrictions on the supply of enrichment and reprocessing equipment (ENR) and technology at the Nuclear Suppliers Group. Though this requirement does not place a direct burden on India, it does further impel the administration to pursue the adoption of ENR restrictions at the international level to the detriment of the Indian side.

Sixth, the Bill seeks to introduce a potentially dangerous sequencing requirement that will undermine the reciprocity India has built into the implementation of commitments by both sides. Under section 104(2), the Nuclear Regulatory Commission will not be allowed to issue licenses for any transfers to India until the President determines and certifies that the declaration of facilities to be safeguarded by India pursuant to paragraph 13 of the India-specific safeguards agreement (ISSA) has already been filed. Moreoever, lest India exploit the space it has between the filing of its declaration under paragraph 13 and its notifications under paragraph 14 (following which the facilities in the declaration get listed in the ISSA annex and go under safeguards), the Senate and House Bills introduce a new reporting requirement under section 105(a)(2) to see if there are any "material inconsistencies between the content or timeliness" of the notifications and the March 2006 separation plan.

Under the July 18 2005 agreement, India was meant to separate its military and civilian facilities and file a declaration to the IAEA in that regard. This it did via the document, Infcirc/731, as has been acknowledged by the U.S. in its Presidential determinations of September 10. But the declaration and notifications to be filed under Paragraphs 13 and 14 are linked in the safeguards agreement to "the determination by India that all arrangements conducive to the accomplishment of the objectives of the [safeguards] agreement are in place", i.e. fuel supply arrangements, deals to import reactors etc. which cannot be finalized until the NRC issues a license.

Seventh, the irony is that India's commitments under the separation plan are being treated as sacrosanct (which they are) but the legal nature of the U.S. commitments on fuel supply assurances are not even referred to. Indeed, apart from the reference in Section 102(a) to the President's "authoritative representations" renouncing the fuel supply commitments contained in Para 5.6 of the 123 agreement, the Senate Bill restates more explicitly the “political” rather than legal nature of the fuel commitments in Section 105(b)(3)(ii)(V) by requiring the administration to provide Congress with the details of "any United States efforts to fulfill political commitments made in Article 5(6) of the Agreement".

Eighth, at India’s urging, the word "subsequent" before "arrangements and procedures" had been deliberately kept out of the 123 Agreement’s language on reprocessing consent rights because of the specific meaning it has under Section 131 of the U.S. Atomic Energy Act. However, this term -- and the full Congressional oversight envisaged by Section 131 -- have been dragged back in to the equation by the Senate Bill. Ordinarily, this ought not matter. But given the way the U.S. has played the executive-legislature division to force India to accept conditions it might otherwise not have accepted , there is every likelihood of a repeat when India and the U.S. start negotiating over the circumstances under which the reprocessing consent rights will be "brought into effect". This is especially important given persistent US demands for safeguards above and beyond IAEA safeguards, and its insistence on the non-permanence of consent rights -- something India will surely have a tough time accepting.

Ninth, anticipating the possibility that France and Russia may grant India reprocessing rights on conditions more favourable than that given by the U.S., the Senate Bill in section 201(b)(1)(C) stipulates that America’s own arrangements cannot take effect unless the President certifies that the U.S. will pursue efforts with other countries giving India reprocessing rights to ensure they insist on "similar arrangements and procedures".

Some of these extraneous demands might well be waived aside by President Bush when he signs the Bill into law. But the core problem with the legislation cannot be so easily done away with. India can still bravely argue that it will be bound only by the language of an international agreement and not Hyde and that if the U.S. invokes Hyde to renege on the 123 Agreement, it will have recourse to international law. But in the absence of any arbitration clause, international law allows only for abrogation or an appeal to the International Court of Justice. Even if fuel supplies and the nuclear testing issue were overcome, the problem of “permanent” reprocessing consent rights would still remain. If India had no other alternatives and was desperate for nuclear commerce with the U.S., there might arguably be some merit in risking a future legal dispute with Washington. But given the alternatives now available thanks to the NSG, New Delhi needs to cut its losses and give serious thought to not operationalising the 123 Agreement at all.

There is, within the Indian establishment, a section which sees merit in kicking the can down the road and walking away two years later when it becomes apparent that the differences on fuel supply and reprocessing are indeed unbridgeable. The downside of that strategy is that the American expectations of a payoff by then will even greater than what they are now. While properly choreographing the endgame is important, it is impossible to paper over the cavalier manner in which the U.S. has negotiated with India. One only hopes that despite professing deep affection for Mr. Bush, Prime Minister Singh might have learnt a thing or two about delivering what the Americans call a message of “tough love”.


dhavaladhara said...

The 123 agrement is now exactly where the US wanted it to be -- a perpetually tantalizing nuclear trade passport, that is always a finger breadth away from what you need, (at a hefty price!- no free passes here!!) with a constatnt democles sword hanging ( you are safe as long as the US president is on India's defence) to get India to tow the strategic US line for the future (external policy and internal markets)- no guesses for whose benefit that is going to be!

The well choreographed good-cop(Bush)/bad-cop(congress) routine for the past three years is a lesson for ALL negotiators to learn. The July statement, March separation plan, 123 negotiations, private assurances, public admonitions and else, are all scripted to get the reluctant nation to this stage.

India should not forget the past experience with the British -- the motives, the deception and the whole play. Freedom cannot be thrown away this recklessly - no matter the inducements. The time has come to take a stand and hold your head high... not murmur excuses for a deal! Kudos to Sidharth for exemplary coverage!!

Anonymous said...

I concur with Sid. India should do what is suggested here. But the key point is- are the leaders of the country understanding this.

Won't we doing injustice to future generations by signing on such a lopsided and flawed agreement which makes this whole thing almost a joke.

You invest billions and become dependent on nuclear energy and then someone comes along and pulls the plug. Wow!

Some in US are saying that this may be the best India would get because the next leader may not give even that much. well, why be so scared.

Siddharth, what has India got to loose if we let the deal hang on fire, now that there are alternatives?

Anonymous said...

I am not sure why people think that India owes the US anything for the deal. It was a commercial arrangement. We all know what India got, but look at what the US got. Firstly, it developed influence in India, even while it was pumping weapons and arms into Pakistan. Secondly, it strengthened the other potential power in Asia, and thus potentially hedged its bets on the so called peaceful rise of China. Thirdly, it opened a lucrative commercial market that was closed to American weapons. Fourthly, it was the payoff for the broken US promise to end Pakistani terrorism in return for a withdrawal of the IA from its jump of points in 2001. We know that promise was never kept.

India owes the Americans nothing. What they did was in their own self interest. India should deal with them accordingly.

Anonymous said...

Nuclear deal is not for the faint hearted. It is playing hard ball.

I do not quite agree that new Bill changes India's obligations. It does however impose obligations on US that may make a fuure administration if it so chose to deny supplies to India. Therefore, nuclear commerce with US or with any other country for that matter is about political commitments and not legally binding rights and obligations.

The way out for India is in the following:

Pass a law in India that stipulates that any contract for nuclear commerce with India will be carried out under following conditions:

readiness to grant fuel supply without disruptions for the lifetime of reactors.
readiness to provide fuel for strategic reserves.
permanent consent to reprocessing waste material.

However, this would enhance the cost of implementing projects manifold if India was to buy up and stock fuel apart from creating uranuim scarcity with further cost implications. This underlines the futility of fuel supply rights.

We are not likely to test in near future and therefore there would not be any problems in the shorter run. But if we were to test these rights built in contracts will provide a protective layer. We keep complaining about the US laws but do not have laws of our own to protect our interests and to help with negotiations. A lesson to learn from the US here.

Anonymous said...

Intersting point:

If artcile 5.6 are political commitments, are then India's commitment to safeguards in perpetuity also so?

Sukla Sen said...

Siddharth, who was unabashedly celebrating the triumph of India's brazen and ugly nuclear ambitions, is evidently a bit of heart-broken.
That of course does not make him desist from presenting the actions of the dissenting elements within the US Congress, clearly meant to spoil the party, as an orchestrated ploy on behalf of the Bush Administration.
He, consequently, even does not try to explain the loss of face suffered by the Administration at its failure to get the Agreement ready for signatures by the two concerned state heads when Manmohan Singh visited the American President.
It's, however, the privilege of the conspiracy theorists to explain away everything incongruous in terms of "conspiracies" and "stage-managed shows". But such ploys on their parts can hardly tackle the issue of credibility deficit as far as the broader audience is concerned.

But what is more important is that the 123 Agreement is yet to clear the hurdle. And in the rather unlikely event of its eventual failure to do so this year would prove a great setback for the American nuclear industries. Even Manmohan Singh, with all his explicit love for Bush and all that goes with him, may not be able to come to their rescue with Russia and France breathing down the neck with attractive ready offers.

It is, however, somewhat perplexing why Siddharth is heart-broken, instead of being jubilant, at the prospect of the 123 Agreement turning "lame duck" or unworkable/unimplementable? Even if India signs the bilateral 123 Agreement, it'd be very difficult to place orders on the US companies unless uncertainties concerning future supplies etc. are removed beforehand, especially when the competitors - Russia and France in this case - are not burdened with any comparable restrictive conditionalities.
The only plausible answer is that he wants nuclear India to gain full recognition as such. Nothing less would do.

Sid said...

I am heartbroken? Er..... Not!

Anonymous said...

Even after excluding reprocessing technology, India should take care that it gets the latest state of the art technology in other aspects of nuclear industry. When in the famed software sector Indian industry is not allowed to rise up on the high-end level then why should we assume in the nuclear arena the Americans will allow the Indian industry that leverage ? I bet the Americans will maximum excercise of their intellectual propert/trade secret rights.
For every industrial transaction India should also demand participation in high-end R&D and education sector too.

Anonymous said...

Negotiating with the US was a necessary evil to move the international system ahead of where it was w.r.t. India. All that is goodness.

Now India should payoff its friends in the US - deposit money in their favorite offshore account or provide access to Indian business - and move on.

Anonymous said...

Just take a look at Statements of Policy and Sense of Congress provisions nad check the boxes that US Administration has not abided by.

That will put people in place who were taking them as issues that were unacceptable.

HR 7081 similarly has some declarations of policy that will die like that. Surely time will tell.

witan said...

Bush has to get the "123"-deal through the Houses of Representatives and the Senate. In contrast, the UPA has decided that Parliament's approval is not at all needed, and did not even allow a discussion in Parliament. WHAT A BIG DIFFERENCE!
Manmohan Singh, Sonia et al. have, effectively transformed into a banana republic.

Siddharth Varadarajan said...

@ Anoonymous -- Statements of policy are useful as a guide when we know them to be a reasonable reflection of actual, underlying policy. For example, if HR 7081 had said it shall be US policy to get Indians to eat less chilies, one can laugh it all off. But when it endorses the Bush letter on fuel supply assurances and other matters which go to the heart of the 123, they render, in my opinion, the agreement essentially unimplementable. Please note that this is not a tragedy since we have the NSG. But we cannot ignore the legislation either.

Siddharth Varadarajan said...

@ dhavaladhara

I too marvel at the way the US has played India. But the Indians, after some initial hitches (including some pretty disastrous ones) ran a pretty tight negotiating ship too. Of course, they must not lose their nerves at the closing moments of the game.