A stake has been driven through the nuclear deal

An initial reaction to the latest evidence of American bad faith

Siddharth Varadarajan

On May 22, 2008, I wrote about HR711 and the "secret" clarifications the State Department had provided the House Foreign Relations Committee on the provisions of the 123 Agreement between the United States and India.

The "clarifications" were provided in January this year but kept under wraps for nine months at the request of the State Department, given the obvious sensitivity involved.

Well, two days before a crucial meeting of the Nuclear Suppliers Group where the terms of India's nuclear engagement with the rest of the world are to be set, those clarifications have been made public. If you don't have the patience to plow through them, Glen Kessler has a report in today's WaPo.

The clarifications cover a lot of ground but essentially emphasise the Bush administration's stand that:

1. All fuel supply assurances built in to the March 2006 separation plan and the 123 agreement become null and void for any disruption of fuel supply caused by an Indian nuclear test.
2. The U.S. will not work with friends and allies to make good any shortfall of fuel which results from US termination of cooperation following a test and actually intends to get all NSG states to end their cooperation as well.
3. Reprocessing consent rights are not permanent, as Prime Minister Manmohan Singh had said, but allow for termination. This will be spelt out in the yet to be negotiated "arrangements" to bring effect to the consent rights.
4. The U.S. has no intention of transferring dual-use items for any enrichment and reprocessing related facility in India.
5. The U.S. will press its "right" to fall-back safeguards even if the IAEA does not make a determination that safeguards on American supplied facilities or fuel are no longer in place.

In May, I wrote this about the 'secret' answers:

What does this mean for India, assuming the nuclear deal is able to pass the gauntlet of Left opposition and move on to the next stage? For one, that the U.S. will likely attempt to claw back the concessions it made in the 123 agreement and close the window on India getting at the international level what U.S. vendors are unable to provide under domestic law. India, for example, does not need enrichment and reprocessing technology from others but would like to import components for safeguarded fuel cycle facilities. The 123 agreement excludes this but the NSG at present has no separate bar on the sale of such components. Second, the Indian interpretation of many of the 123 agreement’s provisions — especially on the right of return — differ significantly from the American one. Since it is this deliberate ambiguity of language which allowed the 123 text to be sold by the two governments to their respective publics, any attempt to resolve these “differences of interpretation” could well lead to the agreement itself unravelling.

Until now, India was willing to swallow some of the unpleasant provisions of the 123 agreement because it knew that what mattered in the final analysis were the NSG guidelines. After all, the 123 agreement gets “operationalised” only when India buys nuclear equipment and fuel from the U.S. And so long as the NSG guidelines allow India to buy what it wants from other countries, a prudential strategy would be one which postpones this operationalisation for a few years. It is precisely this sequencing loophole in the nuclear deal that the U.S. is now trying to plug by denying India the "clean exemption" it wants from the NSG. All indications are that the NSG hurdle will be the hardest of all. But India will always have the option of walking away from the table if the nuclear cartel seeks to impose unreasonable restrictions on the country.

I think that moment is now upon us.

Was the releasing of the State Departmen's answers on September 2 an act of unilateral disclosure by the HFRC's Howard Berman (a known critic of the India-US agreement) or a bilateral provocation by Berman and the State Department to ensure the NSG does not approve terms more favourable than what the US has accorded to India? Either way, the consequences are devastating -- for India's chances at the NSG, for the political standing of Prime Minister Manmohan Singh, and for the bilateral relationship between New Delhi and Washington.

Why? Because the answers/clarifications show there is such a huge gap between the Indian and American perception of the 123's provisions that no Indian government can afford to buy even one cent's worth of nuclear equipment from the United States without first resolving these differences. The only insurance still left in India's hand if the Americans push ahead with their interpretation on fuel supply assurances is to build a strategic reserve (of non-American fuel) to guard against supply disruptions caused by U.S.-led sanctions.

At a minimum, it is clear that the bilateral aspect of the US-India nuclear agreement is dead. Repeat. Dead. But if the bilateral part is dead, what chance is there for the multilateral part to survive?

In a nutshell, there are two scenarios from now.

Scenario 1: The NSG will demand a third draft waiver be produced in line with the formulations of the State Department document. An essential feature of this document will be automatic termination of all supplies by all NSG members if India were to break its testing moratorium. Plus other things that India also will be unwilling to accept. Result: Sudden death of the deal.

Scenario 2: The NSG approves the second draft as it stands (with perhaps minor changes) but India will not be able to proceed with the 123 agreement unless the conflicting interpretations are sorted out. Result: India will not buy American.

Scenario 3: NSG approves second draft, Congress approves 123 but India will simply not buy American because of the restrictions and dangers involved in developing a dependence on U.S. supplies.

Of these three scenarios, #1 is the most likely. If India likes, it can choose to make the deal's 'sudden death' a more slow and painful process. But let us also be clear that there is politically no space in India for the Manmohan Singh government to engage in a third round of negotiations with the U.S. over the NSG draft waiver. Levels of distrust of the Americans are running incredibly high in political and bureaucratic circles as a result of the August 21-22 NSG fiasco. I had described that event as a double-cross. What has happened this time is the mother of all double-crosses. I mentioned this assessment to a senior Indian minister who phoned me from Delhi to find out what had happened. He agreed with my assessment, and that this denouement means major trouble for the bilateral relationship across the board.

Even the pro-American business community in India is likely to run for cover since the State Department's answers show at best that India and the U.S. are on a different page altogether and at worst, that Washington has been negotiating in bad faith.