Senate 'testimoney' on the 123 Agreement

The Senate Foreign Relations Committee on September 18 held a hearing on the 'Agreement for Peaceful Nuclear Cooperation with India', a.k.a. the 123 Agreement.

So far, the "money quote" from these hearings is, quite literally, this statement by Under Secretary for Political Affairs William Burns:

"The Indian government has provided the United States with a strong Letter of Intent, stating its intention to purchase reactors with at least 10,000 Mega Watts (MWe) worth of new power generation capacity from U.S. firms. India has committed to devote at least two sites to U.S. firms."

This is indeed quite hefty bait, something GoI has never spoken about.

Also, Senator Richard Lugar warned of the possibility of amendments:

Given the need to waive most of the 30-day consultation period, a simple, privileged resolution is unavailable to us. Amendments will be in order, and there is no guarantee of a vote on final passage.

I'll post again later on the Q & A when it becomes available, though a wire service report tells us:

On the question of fuel assurances, Burns, making a distinction between ‘political commitment’ and ‘legally binding’, said the implementing 123 agreement provided a legal framework for it, but does not compel the US to do that.

‘It’s not an enabling legislation as we could not compel US firms,’ he said. Another reason for making the distinction was that the president of the day would have to look at the circumstances and take a decision keeping US interests in mind.

‘What we have agreed to do is to help should there be a market disruption or other reasons beyond India’s control,’ said Rood.

But would the US still be compelled to get India fuel from other countries in case the president determines that India’s actions warrant a termination of the deal, persisted Dodd.

‘It would be inconsistent to terminate and then arrange alternative fuel supplies,’ said Rood.

[Update @ 1455 IST: PTI's Sridhar Krishnaswami has an excellent and detailed account of the Q&A up and running]

There'll be more, but in the mean time, the prepared remarks of Lugar, Burns and Acting Under Secretary for Nonproliferation John Rood give some indication of the issues coming up ...

The hearing was chaired by Senator Chris Dodd in Joseph Biden's absence. Lugar made an opening statement, raising four questions:

First, Indian leaders claim that the United States has agreed that India can test its nuclear weapons and obtain stocks of nuclear fuel to guard against sanctions... The President’s Message to the Congress transmitting the proposed agreement states that any provisions in the agreement are political commitments and not legally binding. Which explanation is factual, and how do these conflicting statements effect the operation and implementation of the agreement?

Second, is the agreement fully consistent with U.S. laws that would require termination of the proposed agreement and cessation of nuclear exports to India if it detonates a nuclear explosive device or proliferates nuclear technology?

Third, are the terms of the proposed agreement regarding fuel supply from the United States to India, or supply of fuel from third countries to India, or the creation of a strategic reserve of such fuel in India consistent with the intent of the Hyde Act? How would the agreement work in cases in which the United States decides to terminate fuel supply to India or demands the return of nuclear material and equipment to the United States in response to an Indian violation of the 123 agreement or its new safeguards agreement with the IAEA?

Fourth, to what extent has the United States created a new kind of 123 agreement and model for international nuclear cooperation that may benefit additional countries that have not accepted the NPT and that do not have a comprehensive safeguards agreement with the IAEA?

In their testimony, neither Burns nor Rood tried directly to answer these questions.

Rood's statement was remarkably opaque and non-informative, merely repeating what the administration has been saying for the past two years and taking care to say nothing that could provoke either India or the nonproliferation lobby.

He made one substantive point, however. The NSG waiver was "fully consistent" with the Hyde Act. How so? Because:

The same Indian nonproliferation commitments made in the July 2005 Joint Statement between President Bush and Prime Minister Singh, which were also incorporated in the Hyde Act, are included in the NSG statement. In fact, the NSG explicitly granted the exception based on these commitments and actions by India.

This is a correct and clever answer. India has no problems with those parts of Hyde which draw on its July 2005 commitments. [Hyde, in fact, went a bit further in some respects (eg. it asked the President to determine that India was supporting international efforts to limit the spread of ENR technology to states "which do not already have full-scale, functioning plants"; India's commitment in July 2005 did not include this specific reference to full-scale, functioning plants, something that might rule out future Indian cooperation with countries like South Africa, Brazil, Argentina and Canada which have ENR technology but no operational plants (although Brazil has Resende). Accordingly, the NSG waiver makes no such demand.] But India has a problem with other provisions of Hyde, none of which made it in to the NSG waiver such as restrictions on the quantum of fuel supply, ban on ENR, automatic termination of supply in case of a nuclear test.
As for termination of supply at the NSG level, Rood argues that

India’s voluntary, unilateral moratorium on nuclear testing is important. We have been very clear on this subject with the Indian Government. Just as India has maintained its sovereign right to conduct a test, so too have we maintained our right to take action in response. As Secretary Rice said before this committee in April 2006, “We've been very clear with the Indians…should India test, as it has agreed not to do, or should India in any way violate the IAEA safeguards agreements to which it would be adhering, the deal, from our point of view, would at that point be off.” In the 123 Agreement, for example, either Party has the right to terminate the agreement and seek the return of any transferred materials and technology if it determines that circumstances demand such action. Likewise, the NSG exception permits any Participating Government, including the United States, to request a meeting of the Group to consider actions if “circumstances have arisen which require consultations.” (emphasis added)

Again, technically correct, except there is no automaticity. A fresh meeting, and fresh consensus on termination would be needed. The U.S. could and would try and ram things through again. But other powers like Russia would have a veto.

Burns's statement was interesting for putting MW numbers on to the Indo-U.S. nuclear agreement for the first time, 10,000 of them. He also said another thing the Indians have tended to remain silent about:

India also has committed to adhere to the Convention on Supplementary Compensation for Nuclear Damage. Adherence to this international liability regime by the Indian government is an important step in ensuring U.S. nuclear firms are competing on a level playing field with other international competitors.

This has been a bugbear for GE and Westinghouse because, as private (i.e. nonstate) entities unlike Rosatom or Areva, they are leery of building new reactors anywhere in the world without their future liabilities from any accident being limited in advance (What this will do for public opinion in the "two sites" the GoI has promised American nuclear companies is another matter...)

The bottom line from Burns is that any delay in approving the 123 Agreement will only hurt the United States:

Without approval and implementation of the 123 Agreement, however, U.S. nuclear firms will be precluded from competing in this important new global market. Reflective of our new relationship with India, the Indian government has publicly stated its intention to work with U.S. nuclear firms. But international competition will, inevitably, be intense and we want to avoid exposing U.S. firms to any unnecessary delays.

And, he says, don't forget the other payoffs:

Mr. Chairman, we believe that moving forward on the U.S.-India Civil Nuclear Cooperation Initiative also will help advance other areas in the U.S.-India relationship. It will facilitate and expand on-going cooperation in agriculture, science and technology, defense, and joint democracy endeavors.

I'm sure many in India will not like the sound of that, especially the last two of these "endeavors".