India reiterates ‘legally binding’ nature of 123 pact’s provisions

Pranab Mukherjee signing statement links commercial deals to implementation of text... but in press conference, the minister says India is "aware of expanding relationship with the U.S." when asked about awarding contracts to American companies... (May be that's why Ratan Tata just happened to drop in for the signing ceremony?!)

12 October 2008
The Hindu
(In the print edition of The Hindu, this story was split into two. The url of the second part is here

India reiterates ‘legally binding’ nature of 123 pact’s provisions
Pranab Mukherjee signing statement links commercial deals to implementation of text

Siddharth Varadarajan

New York: Even as it signed a bilateral nuclear cooperation agreement with the United States on Friday, India sought to draw a line under assertions Washington has made about the "non-binding" nature of its fuel supply commitments by declaring that the "[123 Agreement's] provisions are now legally binding on both sides once the Agreement enters into force".

The agreement was signed at the State Department in a formal ceremony for which External Affairs Minister Pranab Mukherjee specially flew in. Secretary of State Condoleezza Rice signed the agreement on behalf of the U.S.

In a statement prior to the actual signing, Mr. Mukherjee noted that the Agreement was the "first step" to civil nuclear cooperation and trade between India and the United States. The Agreement, he said, was about civil nuclear cooperation "and reflects a careful balance of rights and obligations". He added: "The Agreement has been passed by the US Congress without any amendments. Its provisions are now legally binding on both sides once the Agreement enters into force. We look forward to working with US companies on the commercial steps that will follow to implement this landmark Agreement".

In a second statement issued to the press after the signing, Mr. Mukherjee emphasised another key Indian position: "We intend to implement this Agreement in good faith and in accordance with the principles of international law and I am confident that the US will also do the same".

No such reassurance was forthcoming from the U.S. side other than the State Department saying the agreement provided the "legal framework" for nuclear cooperation. The 123 text itself calls the agreement a "legal framework and basis", and it is clear that despite India moving to protect its legal position,problems of interpretation are likely to persist.

Asked how much of the agreement rested on interpretation and trust, the minister told reporters the two sides were bound by the agreed text of the 123 as well as the July 2005 and March 2006 Indo-U.S. joint statements. "It is not merely a question of the interpretations, it's the question of the agreed text on which we are depending", he said. Pressed on the significance of the interpretative statements o fuel supply made by the U.S. administration and Congress, Mr. Mukherjee said he "would not like to make any comment on the process of legislation in the US Congress and their observations on it. The fuel supply assurance is being provided in the text of the 123 itself in Article 5.6".

The most important part of the External Affairs minister’s statements in Washington, DC on the occasion of the signing of the 123 Agreement on Friday was the paragraph on the legally binding nature of the agreed text and the link draw there between its implementation and the “commercial steps that will follow.”

This formulation, which took final shape after days of intense debate involving the Ministry of External Affairs, Prime Minister’s Office and the Indian Embassy in Washington, is intended to clarify four fundamental points considered important by the Indian side.

First, that India’s obligations under the 123 Agreement could not be separated from its rights and that the text itself reflected a “careful balance” between the two which was not to be disturbed. Mr. Mukherjee amplified on this point when he told a press conference later that the text of the agreement “has entrusted responsibilities and obligations on both sides – I have pointed out there is a balance between the obligations and the rights, which we will comply with”. This linking of India’s compliance with its obligations under the agreement – for example safeguards in perpetuity – to the “responsibilities” of the other side (to deliver on fuel) is precisely the balance India has emphasised since the March 2006 separation plan.

The second point that Mr. Mukherjee’s statement sought to make was that India did not accept that the U.S. legislature had entered any reservations to the agreement. This did not mean Congress had not attached riders in passing HR 7081 – the law which approved the 123 Agreement -- but merely that India did not believe these allowed for any derogation of American commitments contained in the 123 text.

The third point was that India regarded the 123 Agreement’s provisions as legally binding on both itself and the U.S., regardless of President Bush’s assertion in his letter to Congress on September 10 that the fuel assurances were only a political and not a legal commitment.

Fourthly, the minister’s statement dropped a broad hint that any commercial contracts with American companies would be possible only once the agreement is implemented , obviously as per its legally binding provisions.

Taken together with the minister’s statement that India expects the U.S. to implement the 123 Agreement in accordance with the principles of international law, New Delhi essentially sought to serve notice that American nuclear vendors cannot hope to do business in India unless the reactors they propose to sell come with legally binding fuel contracts as well as reprocessing consent.

India is likely to repeat these key formulations in the diplomatic note it will exchange with the U.S. at the time of the 123 Agreement entering into force.

Before the agreement can enter into force, however, HR 7081 requires the President to certify that it is the policy of the United States to work with members of the Nuclear Suppliers Group to further restrict transfers of equipment and technology related to uranium enrichment and reprocessing of spent nuclear fuel (ENR).

Though this restriction is not explicitly scripted to be India-specific, the U.S. has been pressing, inter alia, for a special ban on ENR equipment and technology to countries which are not signatories to the Nuclear Non-Proliferation Treaty. India is one of only three states who fall under that category. The NSG will meet again in November and it is understood that Washington will try and push for consensus on new rules, something it has not managed to do so far.

Even though such a policy runs counter to the U.S. promise of full civil nuclear cooperation with India and is seen by New Delhi as a breach of trust, Dr. Rice painted a rosy picture of a “vast potential partnership” between the two countries that could now “be fully realized”. In her remarks at the signing ceremony, she said that “what is most valuable about this agreement is how it unlocks a new and far broader world of potential for our strategic partnership in the 21st century, not just on nuclear cooperation but on every area of national endeavor”.
Mr. Mukherjee echoed the same theme of cooperation in diverse areas like defence and agriculture “gaining momentum” as a result of the signing of the nuclear agreement.

In his press conference, he parried a question on whether India had given the U.S. assurances about giving its companies a certain share of the commercial nuclear contracts to be awarded. “We are entering into commercial nuclear cooperation with the U.S., France, Russia. And these are essentially the commercial contracts and surely the commercial aspect will be taken into account”. “But”, he added, “we are aware of our expanding relationship with U.S.”.

Asked again whether there would be preference given to U.S. vendors, Mr. Mukherjee replied: “I have not used the word preferential treatment. These are commercial transactions and as and when these commercial transactions take place, they can be commented like that.” He also declined to comment on estimates of the value of future business the U.S. might garner in India. Last month, India gave the U.S. a Letter of Intent promising to purchase up to 10,000 MW of nuclear power generating capacity provided the per unit cost of electricity involved was competitive. “In terms of value, other ingredients”, said the minister on Friday, “it is too early… These are all estimates and as and when it materializes, then we will see”.

Among those present at the signing ceremony were Atomic Energy Chairman Anil Kakodkar, Foreign Secretary Shiv Shankar Menon, Special Envoy Shyam Saran and industrialist Ratan Tata, whose conglomerate has expressed a keen interest in entering the nuclear powersector.