U.S. delivers 123 blow to India

In his September 10 message to Congress, President Bush makes it clear that the U.S. does not consider itself legally bound to honour its fuel supply assurances to India even after the 123 agreement is approved...

Story impact: NDTV, PTI,
Communist Party of India (Marxist), CNN-IBN, The Times of India



12 September 2008
The Hindu

[In the print edition of The Hindu, this story was carried in two parts. I have recombined them here but the original version of the second part, 'India believes fuel assurances are binding' can be found here.]

U.S. delivers 123 blow to India Fuel assurances not binding, says Bush

Siddharth Varadarajan

New Delhi: The United States has diluted the fuel supply assurances contained in the ‘123 agreement’ on nuclear cooperation with India, with President George W. Bush formally declaring, in his September 10 message to Congress, that all American commitments to the Indian side in this regard were not “legally binding.”

As part of the process of completing the U.S.-India civil nuclear cooperation initiative, Mr. Bush forwarded the text of the 123 agreement to Congress with a covering note and a separate memorandum containing seven ‘determinations’ that India had conformed to the non-proliferation commitments it had made in July 2005.

But the covering note had a sting in the tail on the question of fuel assurances, which India sees as an essential component of the interlocking set of commitments and obligations both sides have undertaken since 2005.

“In Article 5(6) the Agreement records certain political commitments concerning reliable supply of nuclear fuel given to India,” President Bush’s statement says. “[The] Agreement does not, however, transform these political commitments into legally binding commitments because the Agreement, like other U.S. agreements of its type, is intended as a framework agreement.”

This formulation, say Indian officials, is completely at odds with the understanding India has that the assurances are indeed meant to be legally binding. “After all, India has committed itself to binding commitments like safeguards,” said an official. Officials also reject the notion that the Indian 123 could be treated “like other U.S. agreements of its type” since fuel supply assurances figure only in the Indian agreement. And the need for legally binding fuel assurances arose because India — which is not obliged to place all its reactors under safeguards, unlike other non-nuclear weapon states with which the U.S. has signed agreements — was voluntarily accepting IAEA supervision.

Since the signing of the 123 agreement is meant to be the highlight of Prime Minister Manmohan Singh’s forthcoming visit to the U.S., Indian officials are now scrambling to find ways of undoing the damage caused by the Bush message.

The administration’s formulations, say sources, ensure that even if the 123 agreement is rapidly approved, its provisions will remain a virtual dead letter given their negative implication for the commercial viability of any reactor imports from the United States, as opposed to from Russia or France.

123 and Hyde Act

Finalised in July 2007 after several months of difficult negotiations, the 123 agreement on civil nuclear cooperation with the United States was meant to pave the way for the actual import of nuclear material by India as broadly allowed by the Hyde Act of December 2006 but without any of its encumbrances.

If the Hyde Act embodied restrictions that India found offensive, Indian negotiators sought to create a legal framework for nuclear trade with the U.S. that would ensure two critical objectives: lifetime supply of fuel for any reactors India might import or place under safeguards, and the right to reprocess the spent fuel produced by U.S.-origin facilities.

Early in the negotiations, the Indian side pressed for the legal recognition of India’s rights rather than the mere assertion of a political commitment. And they were satisfied when the U.S. finally agreed to the incorporation of the fuel supply assurances contained in the March 2006 U.S.-India statement. And to upfront reprocessing consent rights with the proviso that these rights would take effect upon the establishment of a new, safeguarded reprocessing facility in India and the conclusion of an agreement on arrangements and procedures within a year of India making a formal request.

So confident was the United Progressive Alliance government of the ‘legal’ sanctity of these fuel assurances that, in its note of September 17, 2007, it told its erstwhile Left partners that “once the 123 agreement is approved by the U.S. Congress, it will become U.S. law, which as the U.S. Constitution expressly provides, ‘shall be the supreme Law of the Land.’ The U.S. commitment for assured fuel supplies for the lifetime of India’s safeguarded reactors should, therefore, be under no doubt.”

The government also argued that Article 5.6(a) of the 123 agreement was tantamount to “a U.S. commitment to amend its domestic laws should any law stand in the way of the U.S. fulfilling these fuel supply obligations.”

In its note of September 24, 2007 to the Left parties, the government amplified on this theme: “By its very nature as an enabling legislation, the Hyde Act is not required to include fuel supply assurances... The 123 agreement, which was negotiated thereafter, included them in toto. This validates our contention that it is the 123 agreement and not the Hyde Act that should be treated as governing the rights and obligations of the parties.”

The first clear sign of the U.S. refusing to treat the fuel assurances as legally binding came in the answers provided by the State Department to queries of the House Foreign Relations Committee (HFRC) about the 123 agreement. These answers were provided to Congress on January 16 but made public only last week.

In question 14, the HFRC asks: “Which of the commitments that the United States made in Article 5 are of a binding legal character? Does the Indian government agree?” The State Department’s reply was: “The question quotes paragraph 6 of Article 5, which contains certain fuel supply assurances that were repeated verbatim from the March 2006 separation plan. These are important Presidential commitments that the U.S. intends to uphold, consistent with U.S. law.”

Though Indian officials saw this answer as an attempt by the U.S. to duck what they saw as legal commitments, they assumed the administration would treat these commitments as legally binding once they had become part of the U.S. law following the passage of the 123 agreement in Congress.

But President Bush’s message clearly states that the U.S. does not believe the fuel supply assurances would become legally binding even after the 123 is approved.

Other answers in the State Department document sought to limit the kind of disruptions which would be covered by the fuel supply assurances to those which occurred due to circumstances beyond India’s control. This ruled out a nuclear detonation, it said, something India contests. But with the latest U.S. interpretation, it is clear that even in the event of disruptions caused by “market disruptions in the global supply of fuel; and the potential failure of an American company to fulfill any fuel supply contracts it may have signed with India” — two scenarios mentioned in the answer to question 15 — India cannot count on legally binding fuel supply assurances.

When the State Department’s answers were made public last week, senior officials warned the government of the urgent need to contest its most damaging interpretations. However, India kept its own counsel because it did not wish to do anything to compromise the campaign for the NSG waiver, which the U.S. was leading. But with the White House now literally rushing to secure legislative approval for the agreement before September 26, the Indian side is discovering that the time for it to press its case might already have run out.