India in dilemma over 123 agreement

Speedy approval sought, but doubts remain about U.S. interpretation remain.

10 September 2008
The Hindu

India in dilemma over 123 agreement

Siddharth Varadarajan

New Delhi: Forgotten amidst the euphoria over the Nuclear Suppliers Group waiver, the State Department letter revising key provisions of the 123 agreement continues to worry Indian officials who say it will be risky for the country to buy American nuclear equipment until this issue is sorted out.

The letter, made public on September 2, shows the U.S. understanding of the 123 agreement is sharply at variance with India’s. Senior Indian officials told The Hindu that the State Department assertion limiting the circumstances under which fuel supply assurances would apply was tantamount to undoing an agreed text. The U.S. letter also questions the agreement’s provisions on fallback safeguards and reprocessing rights. Describing the letter’s claim that the Indian government agrees with these American understandings as a “blatant lie,” one official said India was formulating a response that would be communicated to Washington at the political level.

“On all these issues, the letter simply reiterates the U.S. starting position [from 2005 and 2006],” said an official. “It is almost as if two years [of talks] count for nothing.” “They’re trying to claw back concessions they were forced to make during the negotiations” was the assessment of another highly-placed source.

Despite this internal clarity, the government has been reluctant to publicly join issue. If anything, say officials, Ministers who tried to engage in political firefighting after the domestic controversy erupted actually undermined India’s position by insisting the letter contained “nothing new,” thereby implying India concurred with these damaging U.S. interpretations. And though the Ministry of External Affairs said India would be guided “solely by the terms of the [123] agreement,” it called the letter “internal correspondence ... of another government” and did not contest the State Department’s incorrect assertions.

However, with External Affairs Minister Pranab Mukherjee publicly committing India to deferring commercial nuclear agreements with Russia and France till the U.S. Congress approves the 123, the government may not have the luxury of remaining quiet much longer.

Disappointed at the failure of the U.S. to include Hyde Act-type provisions in the NSG waiver, nonproliferationists want Congress to attach riders to the 123 agreement reiterating the State Department’s formulations. Officials say India’s silence only serves to encourage such efforts.

Anti-deal lobbyists in the U.S. say one approach that might be explored is to mandate penalties against countries offering India better terms than what Hyde envisages. While penalties might not deter Russia or France, smaller suppliers, especially of uranium, could be scared off by any extra-territoriality of U.S. law.

India appears politically committed to allowing a modest amount of time for the U.S. domestic process but senior officials warn that neither the country nor its other suppliers can afford to wait very long before signing deals.

“If anything, this letter, by reopening the 123 all over again, makes it easier for us to say we can’t wait,” said an official. “But this call has to be made at the political level,” he added.