Watch me on the 123 @ CNBC tonight

I joined Karan Thapar's panel this evening on the 123 Agreement by telephone from New York. The other panelists were Ambassador Lalit Mansingh and Ambassador K.S. Bajpai. I believe the show will broadcast at 2230 IST tonight, i.e. Tuesday Sept 30. After all is said and done, Ambassador Bajpai is still insisting the riders loaded on to the 123 by Congress don't matter. They are not a problem, though India needs to find out why they've been put in, he said. Why should we bother to find out if they're not a problem, Karan asked. "Just out of curiosity?!". Bajpai had no real answer. Ambassador Mansingh was more critical of the riders but hopes President Bush will undo them in his signing statement, something Karan Thapar said was unlikely since Bush would thereby not only be undoing the riders but contradicting what he himself told Congress on September 10.

Will post the online link when it becomes available.

(So when does my holiday really start?)

Time for a debate on liability and damages

Paul Kerr of the Congressional Research Service runs a quiet but useful blog on arms control issues. Thanks to him, we have the on-the-record answers provided to questions submitted in writing by Senator Robert P. Casey Jr. on September 18 to Under Secretary William F. Burns and Acting Under Secretary John D. Rood.

There's nothing really very new or dramatic in the exchange, though a 'completist' like me still found the document useful. However, I was struck by one of the questions -- on India's commitment to accede to the Convention on Supplementary Compensation for Nuclear Damage (CSC) -- and the answer provided by Burns and Rood.

Question: Press reports indicate that the Indian government has provided an oral assurance to senior U.S. officials that, regardless of the exemption authorized by the NSG, India will not commence civilian nuclear trade with any NSG member until the Congress approves the Article 123 agreement, thereby authorizing U.S. civilian nuclear trade with India in a manner consistent with the NSG exemption and the terms of the Hyde Act.

The September 10, 2008 letter from Indian Foreign Minister S. Menon to Undersecretary of State William Burns states, “it is the intention of the Indian Government to take all steps to adhere to the Convention on Supplementary Compensation for Nuclear Damage prior to the commencement of international civil nuclear cooperation under the Agreement.”

Does that mean that India has pledged to hold off on all civil nuclear trade with all NSG members, as authorized by the NSG exemption, until this Convention enters into force for India?

Answer: India has pledged to take the steps necessary to adhere to the Convention on Supplementary Compensation for Nuclear Damage (CSC), and we expect it to do so soon. This senior-level Indian commitment to become a party to this international liability regime as soon as possible is an important step in ensuring that U.S. nuclear firms can compete on a level playing field with other international competitors who have other liability protections afforded to them by their governments. Because of these differing circumstances, Indian ratification of the CSC has not been a determining issue for nuclear industries in a number of other countries. It is also worth noting that the CSC still has not entered into force and, even with India’s ratification, will not do so until the ninetieth day following the date on which at least five States with a minimum of 400,000 units of “installed nuclear capacity” have ratified the Convention.

OK, now we know that India made a commitment on the CSC from Burns's on-the-record statement during the Senate Foreign Relations Committee hearing of September 18. So that's not news. But the Q&A tells us the pledge was formally communicated in a letter by the Foreign Secretary, Shiv Shankar Menon on September 10, 2008.

Here is yet another example of important policy matters with legislative implications being stealthily discussed with a foreign power by the Manmohan Singh government even as the Indian parliament and public are kept completely in the dark about this.

So what is this CSC? And why has the US nuclear industry been insisting that Indian accession is a precondition for nuclear sales to the country when no such insistence has been made for China? Indeed, the fact that most countries with a major nuclear power industry have not signed on is a little odd, to say the least, even though several of them are parties to the 1963 Vienna Convention on Civil Liability for Nuclear Damage and the OECD's Paris and Brussels Conventions. I should think a vigorous debate on the pros and cons of the CSC is needed in India, and needed urgently.

Within America, the Price-Anderson Act has been used to subsidise liability protection for nuclear operators. The U.S. ratified the CSC in May this year after a sustained campaign by US nuclear operators and vendors concerned about liaibilty for accidents involving U.S. reactors abroad. The State Department has an article-by-article analysis of the Convention here.

Last year, Jack Spencer of the Heritage Foundation laid out the reasons why the CSC was important to the U.S. in an article entitled 'Congress Must Implement CSC Treaty to Reinvigorate U.S. Nuclear Industry':

The existing U.S. liability system for nuclear operations only covers activities inside the United States and does not apply to international commerce. As a result, competing for projects abroad exposes U.S. companies to unlimited liability in U.S. courts. In cases where U.S. firms do compete abroad, they do so with increased risk or within the context of additional regulation, adding cost and undermining competitiveness.

In contrast, many foreign countries provide liability coverage for their nuclear firms or cap their liability exposure. This enables foreign companies to operate freely in the United States (or elsewhere), because they do not risk their entire business by participating in a specific project. The protection offered by other nations puts U.S. companies at a disadvantage in the global marketplace.

The CSC would fix this problem. It establishes an international liability regime that creates common, international standards for handling nuclear facility accident claims. In addition to providing supplemental international funds to pay victims, the treaty would keep liability in the country where the accident occurs. This would help protect U.S. companies from frivolous lawsuits. Under the current system, when a U.S. company engages in international commerce, it potentially risks the entire company. (emphasis added)

Why should India sign the CSC? The CSC creates a contributory compensation fund, limits liability, channels law suits through specific courts and also has a mechanism for dealing with cross-border liability stemming from a nuclear accident. Are these good enough reasons? And if France and Russia are not bothered by the CSC, should we sign on just because one supplier nation, the U.S., wants us to?

I have been told by sources in the GOI that even without the Indo-US agreement, India was looking at the CSC because of the proximity of Koodankulam to Sri Lanka.

I hope that makes the Lankans feel all warm and glowy inside!

Nuclear update: 123 @ House of Representatives

The House of Representatives on Saturday passed HR 7081 -- the ‘United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act’ -- granting legislative approval to the US-India 123 Agreement.

The vote was 298 in favour to 117 against.

Among Republican Congressmen, the split was 178-10.

For Democrats, however, the vote was more even: 120 in favour to 107 against. A total of 17 Congressmen did not vote. Under House rules, a two-thirds majority of those present and voting was required for the Bill to pass, i.e. 278 votes. The final roll call can be found here.

Congressman Howard Berman sponsored the Bill, after he said Condoleezza Rice assured him the U.S. would make the achievement of a decision to prohibit the export of enrichment and reprocessing equipment and technology to states that are not signatories” to the NPT its highest priority at the November meeting of the Nuclear Suppliers Group.

Dr. Rice later clarified what she meant:

Asked to comment on Mr. Berman’s use of the word “prohibit” she said, “I think the wording actually is to seek strict limits on,” according to the transcript.

“...at the NSG, the United States has pursued this policy in the past, but we have pursued several other initiatives at the same time.

“And what I said to Chairman Berman, given that the Administration is coming to an end, this is something that we hope is doable. I couldn’t make any promises about delivery, but we would seek to do this,” she clarified.

“You know that the President has spoken about the need to do something about enrichment and reprocessing. And I think a global approach to this issue of the technologies is an appropriate one. But this has been our policy. But I think what Chairman Berman is speaking to is that we had also paired it with several other initiatives, and we’ll seek this one as the highest priority now,” she said.

The Senate is likely to approve an identically worded Bill on Monday, President Bush will then sign it into law, and Dr. Rice is slated to travel to Delhi on October 3 to get the 123 Agreement signed by the Indians.

So what should India do?
1. Simply roll over and sign
2. Sign it with a strong reiteration of its national understanding, repudiating the riders that have been inserted by President Bush and Congress?
3. Tell Condi, thanks but no thanks.

Comments and suggestions welcome....

Congressional riders turn 123 Agreement into lame duck

India can no longer hide behind the claim that “internal processes” within the United States are of no concern...

27 September 2008
The Hindu

Congressional riders turn 123 Agreement into lame duck

India can no longer hide behind the claim that “internal processes” within the United States are of no concern.

Siddharth Varadarajan

New York: The speed at which Capitol Hill moved may have surprised many but Congressional approval of the bilateral nuclear cooperation agreement with India – imminent at the time of going to press – comes laden with riders and conditions aimed at reinforcing a principal policy objective: how to ensure the Indian side doesn’t play the global nuclear field to the detriment of American economic and political interests.

Since the “internal communications” between different branches of the American government derogating from core provisions of the 123 are now embedded in the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act, New Delhi will have to take a tough call about whether and how it will sign and implement the bilateral agreement.

Hoping to avoid or postpone the inevitable unpleasantness that any reluctance to sign would bring, Prime Minister Manmohan Singh and his advisers are hoping President George W. Bush will bail them out by issuing a “signing statement” dissociating himself from some of the more distasteful Congressional edicts. But this is easier said than done, even assuming Mr. Bush violently disagrees with the riders that have been attached to the 123 Agreement in the first place. For the fact is that all that Congress has done is to embed the “authoritative representations” the President and his representatives made in written submissions prior to the agreement being sent up the Hill. It would be remarkable, indeed, were Mr. Bush to now declare that he will not be bound by the very representations he authored less than a fortnight ago.

A careful consideration of the Bill to approve the 123 Agreement reveals no less than nine specific problems with the draft language of the benchmark Senate version. Much has been made of the version tabled in the House of Representatives by Congressman Howard Berman. But other than largely inconsequential changes in four separate places, his version is a carbon copy of the disastrous Senate Bill whose eventual passage will render the 123 Agreement a lame duck from India’s point of view.

First, the Manmohan Singh-led United Progressive Alliance government had said all along that it shared the Opposition’s reservations about the Hyde Act passed by the U.S. in December 2006. A fair attempt was made to recover some ground in the 123 Agreement by balancing the Indian legal commitment to safeguards with the American legal obligation to ensure fuel supplies. When a skeptical opposition doubted whether such an agreement could ever be implemented, the UPA maintained that the 123 would supersede Hyde once it was approved by Congress and entered into law. That tendentious claim is now being given a very public funeral. The new Bill establishes the explicit supremacy of the Hyde Act over the 123 Agreement in Section 101(b) and reinforces this in the rules of construction in 102(d) when it says nothing in the Agreement should be construed to supersede the legal requirements of the Hyde Act.

Second, section 102(a) of the Bill says the 123's provisions have the legal meanings contained in the "authoritative representations" made by the president and his representatives. By stating so, the U.S. is formally entering a reservation about, inter alia, the nature of the fuel supply assurances contained in the agreement as well as on the ‘non-permanent’ nature of reprocessing consent rights. Once the Bill is passed and India signs the 123 agreement, it will be tantamount to accepting these reservations in international law. It is futile to think legally binding fuel assurances can be built into a contractual arrangement with American reactor suppliers like Westinghouse and GE. Besides, by accepting these reservations now, India will be in a weaker position to negotiate fuel arrangements in the future.

Third, the Bill reiterates in section 102(b) a particularly obnoxious provision of the Hyde Act that it shall be American policy to seek to prevent nuclear supplies to India from other countries in the event of the U.S. terminating nuclear cooperation with India for any reason. This is further aimed at making it difficult for India to look elsewhere once the U.S. decides to shut the door.

Fourth, the same section makes another declaration of policy -- that any fuel reserve provided to India pursuant to the Hyde Act must be “commensurate with reasonable reactor operating requirements”. Of course, this declaration of policy is superfluous since the Hyde Act itself spells this out explicitly via the Obama amendment. Once again, the net effect is to try and deny India the ability to create space for itself by building the kind of strategic fuel reserve envisaged by the March 2006 separation plan as well as the 123 Agreement.

Fifth, as provided for in section 204, the Bill seeks to the tie the entry into force of the 123 Agreement to a certification by the President that it is U.S. policy to tighten restrictions on the supply of enrichment and reprocessing equipment (ENR) and technology at the Nuclear Suppliers Group. Though this requirement does not place a direct burden on India, it does further impel the administration to pursue the adoption of ENR restrictions at the international level to the detriment of the Indian side.

Sixth, the Bill seeks to introduce a potentially dangerous sequencing requirement that will undermine the reciprocity India has built into the implementation of commitments by both sides. Under section 104(2), the Nuclear Regulatory Commission will not be allowed to issue licenses for any transfers to India until the President determines and certifies that the declaration of facilities to be safeguarded by India pursuant to paragraph 13 of the India-specific safeguards agreement (ISSA) has already been filed. Moreoever, lest India exploit the space it has between the filing of its declaration under paragraph 13 and its notifications under paragraph 14 (following which the facilities in the declaration get listed in the ISSA annex and go under safeguards), the Senate and House Bills introduce a new reporting requirement under section 105(a)(2) to see if there are any "material inconsistencies between the content or timeliness" of the notifications and the March 2006 separation plan.

Under the July 18 2005 agreement, India was meant to separate its military and civilian facilities and file a declaration to the IAEA in that regard. This it did via the document, Infcirc/731, as has been acknowledged by the U.S. in its Presidential determinations of September 10. But the declaration and notifications to be filed under Paragraphs 13 and 14 are linked in the safeguards agreement to "the determination by India that all arrangements conducive to the accomplishment of the objectives of the [safeguards] agreement are in place", i.e. fuel supply arrangements, deals to import reactors etc. which cannot be finalized until the NRC issues a license.

Seventh, the irony is that India's commitments under the separation plan are being treated as sacrosanct (which they are) but the legal nature of the U.S. commitments on fuel supply assurances are not even referred to. Indeed, apart from the reference in Section 102(a) to the President's "authoritative representations" renouncing the fuel supply commitments contained in Para 5.6 of the 123 agreement, the Senate Bill restates more explicitly the “political” rather than legal nature of the fuel commitments in Section 105(b)(3)(ii)(V) by requiring the administration to provide Congress with the details of "any United States efforts to fulfill political commitments made in Article 5(6) of the Agreement".

Eighth, at India’s urging, the word "subsequent" before "arrangements and procedures" had been deliberately kept out of the 123 Agreement’s language on reprocessing consent rights because of the specific meaning it has under Section 131 of the U.S. Atomic Energy Act. However, this term -- and the full Congressional oversight envisaged by Section 131 -- have been dragged back in to the equation by the Senate Bill. Ordinarily, this ought not matter. But given the way the U.S. has played the executive-legislature division to force India to accept conditions it might otherwise not have accepted , there is every likelihood of a repeat when India and the U.S. start negotiating over the circumstances under which the reprocessing consent rights will be "brought into effect". This is especially important given persistent US demands for safeguards above and beyond IAEA safeguards, and its insistence on the non-permanence of consent rights -- something India will surely have a tough time accepting.

Ninth, anticipating the possibility that France and Russia may grant India reprocessing rights on conditions more favourable than that given by the U.S., the Senate Bill in section 201(b)(1)(C) stipulates that America’s own arrangements cannot take effect unless the President certifies that the U.S. will pursue efforts with other countries giving India reprocessing rights to ensure they insist on "similar arrangements and procedures".

Some of these extraneous demands might well be waived aside by President Bush when he signs the Bill into law. But the core problem with the legislation cannot be so easily done away with. India can still bravely argue that it will be bound only by the language of an international agreement and not Hyde and that if the U.S. invokes Hyde to renege on the 123 Agreement, it will have recourse to international law. But in the absence of any arbitration clause, international law allows only for abrogation or an appeal to the International Court of Justice. Even if fuel supplies and the nuclear testing issue were overcome, the problem of “permanent” reprocessing consent rights would still remain. If India had no other alternatives and was desperate for nuclear commerce with the U.S., there might arguably be some merit in risking a future legal dispute with Washington. But given the alternatives now available thanks to the NSG, New Delhi needs to cut its losses and give serious thought to not operationalising the 123 Agreement at all.

There is, within the Indian establishment, a section which sees merit in kicking the can down the road and walking away two years later when it becomes apparent that the differences on fuel supply and reprocessing are indeed unbridgeable. The downside of that strategy is that the American expectations of a payoff by then will even greater than what they are now. While properly choreographing the endgame is important, it is impossible to paper over the cavalier manner in which the U.S. has negotiated with India. One only hopes that despite professing deep affection for Mr. Bush, Prime Minister Singh might have learnt a thing or two about delivering what the Americans call a message of “tough love”.

All you need is love

I can't decide what is more tasteless.

1. President Asif Ali Zardari of Pakistan telling Sarah Palin how gorgeous she is in real life and threatening her with a hug.

2. Or Prime Minister Manmohan Singh telling President George W. Bush "the people of India deeply love you".

At least Zardari's leching conforms to what is considered "normal" for his gender (though certainly not his political position). (You can see the clip on youtube). But Manmohan professed his luhv after Bush and his administration essentially punched him in the solar plexus on fuel supply assurances and reprocessing consent in the 123 agreement. Strange way he chose to convey the country's unhappiness. And that's leaving aside all of Bush's other sins, too numerous and major to bear recounting here.

Nuclear update: 123 @ Senate

The Senate Foreign Relations Committee has marked the 123 agreement up to the Senate but done so in a way that India does not like. As I predicted, implementation of the 123 -- as conceived by the 'United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act' -- 'is to be strictly in conformity with the Hyde Act, its fuel supply assurances are not to be legally binding and the U.S. administration is asked actively to scuttle India nuclear supplies from elsewhere in the event of America terminating cooperation with India.

The redoubtable Aziz Haniffa of India Abroad has the gory details...

N-deal: India finds 'change in language' unacceptable

Aziz Haniffa in Washington, DC | September 24, 2008 11:15 IST

Even as Prime Minister Manmohan Singh [Images] arrived in the United States, the powerful US Senate Foreign Relations Committee under a revised schedule on Tuesday, formally put the US-India civilian nuclear agreement on its agenda and approved it by a margin of 19-2.

But apparently India finds it unacceptable because of a change in language from the 123 Agreement it negotiated with the US and also a more punitive measure if it tests, which was not contained even in the Hyde Act.

The Bush Administration officials, however, said privately that they can live with the compromise language and the Indian-American community leaders and activists who had been lobbying for the deal for years were elated and were hoping that there would be floor action soon in the Senate and House so that the deal could be consummated before the Congress adjourns for the year.

Indian Ambassador Ronen Sen immediately after the Committee's approval of its bill, called leading Indian-American activists -- and it is understood also the Government of India's lobbyists -- expressed India's misgivings about the bill that was passed and said it would be difficult for India to accept the change of language and spoke of the significant issues it raised.

Compromise in this regard was also obviously going to be untenable, particularly since Prime Minister Manmohan Singh himself had drawn a line in the sand and asserted on arrival in Frankfurt en route to the US that the 123 Agreement was non-negotiable.

The parts of the bill, which the Committee titled the 'United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act,' that India found unpalatable were in particular that it had to be in strict conformity with the Hyde Act, and also that in the event India tests, the US would not simply 'discourage' other Nuclear Supplier Group members to deny India nuclear equipment, materials and technology to India but work to 'prevent' such transfers. Also, that the commitments regarding fuel supplies are indeed political and not legally binding.

In Section 101, titled Approval of Agreement, and sub-section (b) with regard to Applicability of Atomic Energy Act of 1954, Hyde Act, and other provisions of Law, the legislation approved by the Committee said, "The Agreement shall be subject to the provisions of the Atomic Energy Act of 1954, the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, and any other applicable United States law."

In Section 102 of the bill titled, Declarations of Policy; Certification Requirement; Rule of Construction, and the sub-section which dealt with Declarations of Policy Relating to Meaning and Legal Effect of Agreement, the legislation clearly laid out that "Congress declares that it is the understanding of the United States that the provisions of the United States-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy have the meanings conveyed in the authoritative representations provided by the President and his representatives to the Congress and its committees prior to September 20, 2008, regarding the meaning and legal effect of the Agreement."

Senior Bush Administration officials, led by William Burns, Under Secretary of State for Political Affairs, who testified before the Committee last week, under intense questioning by the Acting Chairman of the panel Senator Chris Dodd and others, if the 123 Agreement commitment regarding fuel supplies were only political commitments and not legally binding, in the event that India tested, acknowledged they were the former.

And, subsection (b) of Section 102, titled Declarations of Policy Relating to Transfer of Nuclear Equipment, Materials, and Technology to India, which Sen had made clear was most offensive to India said, "Pursuant to section 103(a)(6) of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, in the event that nuclear transfers to India are suspended or terminated pursuant to title I of such Act, the Atomic Energy Act of 1954, or any other United States law, it is the policy of the United States to seek to prevent the transfer to India of nuclear equipment, materials, or technology from other participating governments in the Nuclear Suppliers Group or from any other source."

The word 'prevent,' had replaced the earlier 'discourage,' hence adding on a more punitive component in the case of India testing.

Sub-section (2) also eliminated India being the beneficiary of any additional material, when it stated that "pursuant to section 103(b)(10) of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, any nuclear power reactor fuel reserve provided to the Government of India in safeguarded civilian nuclear facilities should be commensurate with reasonable reactor operating requirements."

And, in reinforcing the Agreement's conformity with the Hyde Act, the legislation stated in sub-section (d) titled Rule of Construction, that "nothing in the Agreement shall be construed to supersede the legal requirements of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 or the Atomic Energy Act of 1954."

Section 103, titled Additional Protocol Between India and the IAEA (International Atomic Energy Agency) stated, "Congress urges the Government of India to sign and adhere to an Additional Protocol with the IAEA, consistent with IAEA principles, practices, and policies, at the earliest possible date."

Senator Richard Lugar, the ranking Republican on the Committee and a fierce nonproliferation advocate, who co-sponsored the legislation with Dodd, with extensive involvement by the chairman of the Committee Senator Joe Biden -- who is on the campaign trail as Democratic Presidential nominee Senator Barack Obama's [Images] running mate-- said, "Today's approval is an important step for the United States and India to seize an important strategic opportunity."

He said, "This cooperation and agreement has been developed through extensive public hearings and public record that answers hundreds of questions. This has resulted in overwhelmingly favorable Congressional votes at each step of the process."

Lugar predicted that "I am confident that we have cooperation from the Bush Administration and a strong bipartisan team in Congress to complete action on the bill this year."

Senior Congressional sources told rediff.com that Congressman Howard Berman, chairman of the House Foreign Affairs Committee, also had considerable input into the Senate Committee's legislation with his staffers and the Senate panel staffers working in concert to craft a bill that could possibly be cloned in the House for floor action.

The two dissenting voters were Senators Russell Feingold and Barbara Boxer, Democrats from Wisconsin and California. Biden and Obama, while not present, voted yes by proxy. Earlier, a killer amendment by Feingold was rejected by 15-4. The amendment sought to require the US to work with other NSG members for a ban on the transfer of enrichment and reprocessing technology to any country that is not a signatory to the Nuclear Nonproliferation Treaty and it was obviously targeted toward India.

Congressman Gary Ackerman, New York Democrat, who chairs the House Foreign Affairs Subcommittee on South Asia and has one of the staunch supporters of the deal, told of India's significant issues with the Senate Committee's legislation, while acknowledging that the were some changes from the original 123 Agreement and the Hyde Act, said, all of this was "a political issue."

He told rediff.com, "The issue of testing is there -- that the deal is off if there's testing. So, then you can have a challenge from the Left politically in India, saying that India gave in to this or that or the other thing. But that's a political question because India says it's not going to test anyway."

"So, if it's not going to test, it's only a psychological barrier," Ackerman argued, and said, "My view is get the darn thing done and we'll worry about the politics there, the politics here later. That's what politicking is -- who gets blamed, who gets the credit."

He reiterated, "Let's get it done. That the main issue -- keep the eye on the ball. That's the prize."

Swadesh Chatterjee, coordinator of the US-India Friendship Council, an umbrella group of Indian American political, community and professional organization, that was formed solely to push through the deal, and which had an Advocacy Day on behalf of the deal on Capitol Hill Tuesday, said, "There has to be a compromise because we have to get it done because there will either be this bill or no bill and we can't let it go for next year because next year, you don't know how many changes there could be."

He told rediff.com, "The changes in this bill from the original 123 Agreement could be insignificant compared to what could be tagged next year and so that it why it is so important to get it done. So, I think we have to live with it and see how it goes. The Senate is trying to make a compromise and it makes sense, because there cannot be two bills--one in the House, one in the Senate. The Senate bill has been okayed by the State Department."

Chatterjee predicted that when Dr Singh meets with President Bush they would reach a compromise which would facilitate the bill going forward "so that hopefully we can complete it in this year's Congressional session."

One senior Administration source told rediff.com that if India rejects the Senate Committee bill, "It wouldn't be just looking a gift horse in the mouth --particularly when timing is of the essence -- it will be kicking it in the mouth."

Interesting non-sequitur

Here's an interesting but brief report in The Telegraph yesterday:

The Indian military establishment, spurred by the nuclear waiver, has begun a review of overseas deployments with A.K. Antony calling on the army, the navy and the air force “to be ready for force projection” in foreign territories.

Whatever Antony meant, he appears to be building on a speech he made last week at a seminar on 'Indian experience in force projection' organised by the Centre for Joint Warfare Studies. That link between the NSG waiver and the need for India to project itself militarily is there. As is this interesting formulation:

The real threats to international security would arise from states that would avoid interdependence, particularly with neighbours... he said.

So let's go for the Iran-Pakistan-India gas pipeline already!

Low tide alert

I will be on vacation for two weeks so don't be alarmed if there's very little activity here!

This is a really big deal

The Government of India has massively upped its estimate of the amount of megawattage it intends to buy from American nuclear vendors. That means essentially Westinghouse-Toshiba and GE-Hitachi. Of course, none of this can happen without the differences in interpretation over fuel supply assurances being sorted out and India receiving permanent reprocessing consent rights. Or can it?

20 September 2008
The Hindu

India offers 10,000 MW of nuclear contracts to U.S.

Siddharth Varadarajan

New Delhi: Whether as bait or actual commitment, the United Progressive Alliance government has promised the United States that India will acquire 10,000 MW worth of nuclear power generating capacity from American firms — more than what it is currently negotiating to buy from Russia and France combined.

This startling figure lay buried in the testimony — or “testimoney” — of William Burns, U.S. Under Secretary for Political Affairs, before the Senate Foreign Relations Committee in Washington on September 18.

“The Indian government,” said Mr. Burns, “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, he added, “has committed to devote at least two sites to U.S. firms.” Until recently official U.S. expectations of contracts in the nuclear arena were pegged much lower. In testimony to Congress in 2006, Secretary of State Condoleezza Rice had spoken of the U.S. building only one or two reactors.

In its January 16, 2008, replies to Congress, the U.S. State Department said India indicated it planned to import at least eight 1000 MWe reactors by 2012 from international sources. In a cautious vein, the State Department spoke of the employment spin-offs “if American vendors win just two of these reactor contracts.”

But some time between January and September, India appears to have sweetened the deal by sending across a “strong Letter of Intent” for the purchase of at least 10 U.S. reactors over an undefined time period.

Speaking to The Hindu on condition of anonymity, official sources familiar with India’s current plans for the expansion of nuclear power said Mr. Burns’s figure indicated two things. “The government appears to have dramatically scaled up both the amount of new nuclear generating capacity it wants built as well as the share within that for imported light water reactors,” said a senior official.

Under the current plans of 20,000 MWe worth of nuclear power by 2020, half that amount is supposed to come from India’s indigenous pressurised heavy water reactors, 2,000 MWe from its fast breeder reactors, and 8,000 MW from imported LWRs. With Russia already building two 1,000 MWe reactors at Koodankulam, that leaves 6,000 MWe of capacity to be apportioned between Russia, France and the U.S.

“But if the target is being hiked to 30,000 MWe or higher, then obviously the share of imported LWRs is also being scaled up.” In a recent speech, Atomic Energy Commission chairman Anil Kakodkar spoke of India importing up to 40,000 MWe of LWRs by 2020. Even so, officials are surprised by the scale of the promise India appears to have made to the U.S. “Even if the number of imported LWRs increases dramatically, the fact is the Americans are in third position in terms of technology,” said an official, expressing surprise that U.S. companies like GE and Westinghouse — which lag far behind their Russian and French counterparts in technological terms and have not built new reactors in the U.S. for decades — could eventually get such a large order.

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".

India's own Daryl Kimball

Daryl Kimball, well-known to readers of this blog, has an evil twin in India. His name is Brahma Chellaney. While Kimball blasts the Nuclear Suppliers Group waiver for India as a "proliferation disaster" which will unleash a new round of nuclear weapon tests by Delhi, Chellaney attacks the NSG waiver as "a self-injurious deal" which will prevent India from completing "the unfinished task of deterrent-building".

Er, what exactly is "the unfinished task of deterrent-building"?

Tests. Loads of them. After the deal, India can't have them, says Chellaney.

So which of the 'evil' twins should we believe? I think both Kimball and Chellaney are wrong as well as right. Kimball is right when he says the deal will leave Indian hotheads free to go for a maximalist nuclear arsenal. What Kimball doesn't get is that Indian hotheads are free to do this anyway. Chellaney is right to apprehend that the nuclear deal will increase the financial and economic consequences of testing. What he doesn't get is that the NSG waiver offers Indian hotheads a potential layer of protection to ride out fuel sanctions in the event of a cut-off following testing -- strategic reserves. For, contrary to his assertion that "the NSG waiver is in harmony with the Hyde Act, mirroring its core conditions", there is no restriction on the amount of fuel India can stockpile.

So what's the bottom line?

1. The nuclear deal does not take away India's "right" to conduct nuclear tests.
2. It does raise the potential costs of testing but also offers a potential layer of protection as well.
3. India's decision to exercise the "right" to test in the future will not be affected by the deal either way but by changes in the country's security environment, the world situation, and domestic political and economic trends, in much the same way as the 1998 tests were.
4. Pressure should be mounted on the one country most likely to test in the next decade -- the United States -- to ratify the CTBT and drop its plans for new nuclear weapons.

In other words, the twins should go after other villains.

Why India and not Israel? Here's why

'Why India and not Israel?" asks Avner Cohen in today's Ha'aretz:

India's exemption could become a precedent for a new approach to Israel's nuclear question. For the first time, Israel is presented with an opportunity for a new, different nuclear future on both the international and regional levels. Israel is also boycotted, if not treated as a leper, over the nuclear issue, despite the fact that it has demonstrated more caution in relation to nuclear weapons than India. In contrast to New Delhi, Israel has never denigrated the non-proliferation treaty, certainly not in public, despite its refusal to sign it. As opposed to India and the U.S., Israel is a signatory to the treaty banning nuclear testing.

So why not? There are three good reasons why....

1. Unlike India, there is no compelling energy demand-related logic at work here, even in the medium or long-term, which would warrant any relaxation in Israel's status.

2. Unlike India, Israel has been guilty of outbound nuclear weapons proliferation activity on a scale even worse than Pakistan. The Israelis closely worked with the apartheid South African regime on nuclear weapons. Beit-Hallahmi and Benjamin Beit-Hallahmi's The Israeli Connection: Whom Israel Arms and why (I.B.Tauris, 1988) provides a useful overview of what was known in the public domain at the end of the 1980s. The Nuclear Weapons Archive also has a good account of the Israeli connection in its account of South Africa's nuclear programme. But the U.S. Army's Warner D. Farr has the most damning assessment of the extent of this relationship in a 1999 monograph published by the USAF Counterproliferation Center at Maxwell Air Force Base:

A bright flash in the south Indian Ocean, observed by an American satellite on 22 September 1979, is widely believed to be a South Africa-Israel joint nuclear test. It was, according to some, the third test of a neutron bomb. The first two were hidden in clouds to fool the satellite and the third was an accident—the weather cleared. Experts differ on these possible tests. Several writers report that the scientists at Los Alamos National Laboratory believed it to have been a nuclear explosion while a presidential panel decided otherwise. President Carter was just entering the Iran hostage nightmare and may have easily decided not to alter 30 years of looking the other way. The explosion was almost certainly an Israeli bomb, tested at the invitation of the South Africans. It was more advanced than the “gun type” bombs developed by the South Africans. One report claims it was a test of a nuclear artillery shell. A 1997 Israeli newspaper quoted South African deputy foreign minister, Aziz Pahad, as confirming it was an Israeli test with South African logistical support. (to see the footnotes, I suggest you read Farr's article at its original link)

There's also the Federation of American Scientists press release on that 1979 flash detected by the Vela satellite and the eventual confirmation of the Israel-South Africa link.

3. Unlike India, any attempt to make an exception for Israel will definitely generate pressure of a break-out from the Nuclear Non-Proliferation Treaty. There is no country which can credibly cite the Nuclear Suppliers Group waiver for India as an excuse to quit the treaty. But if Israel gets to have its nuclear weapons and access civilian nuclear trade, I am willing to bet there would be at least half a dozen regional states which will likely start making noises about quitting the NPT.

End of the road for the 123 agreement

A senior scientist who has closely followed the nuclear deal told me recently of a peculiar ritual among the ancients known as the vridhrshti of the paramacharya. Here, the acolytes of a parmacharya who resists the inevitable call of nirvana dig a hole in the earth, place the reluctant saint in it and dispatch him from this world with the help of the largest coconut they can find. The parmacharya brought wisdom and clarity in his day but he has to eventually make way for others. In the same way, the 123 was needed to allow the NSG waiver to be born but it has outlived its purpose. The coup de grace could be Mr. Bush's reservations on fuel supply, the riders the House and Senate attach, India's refusal to sign a tainted agreement, or the eventual denial of permanent reprocessing consent. The only question is which coconut will prove to be the largest...

16 September 2008
The Hindu

End of the road for the 123 agreement

By undermining its own fuel supply assurances and reprocessing consent, the U.S. has made bilateral nuclear cooperation with India virtually impossible.

Siddharth Varadarajan

In a little less than two weeks, Prime Minister Manmohan Singh will travel to Washington in what is being billed as a reprise of his triumphal visit of July 2005. Three years ago, he left with an agreement that held the promise of nuclear commerce with the United States and with the rest of the world. Last week, at Vienna, the second of those promises was redeemed when the Nuclear Suppliers Group waived its export restrictions for India. As for the first, the Bush administration is pulling out all the stops to ensure the U.S.-India bilateral nuclear cooperation agreement, known as the ‘123 Agreement,’ is ready for signing on September 25.

For those in India who can see what is coming, however, the sheen of this promise has already begun to wear thin.

On September 10, President George W. Bush repudiated a key provision of the 123 Agreement when he declared the fuel supply assurances recorded in Article 5(6) of the agreement were not legally binding. This formulation has been repeated in two other documents submitted to Capitol Hill last week as part of the ‘123 Agreement package’: the ‘Report Pursuant to Section 104(c) of the Hyde Act’ and the ‘Nuclear Proliferation Assessment Statement’ (NPAS). The NPAS and Mr. Bush’s letter also introduce a dangerous new interpretation of the duration of reprocessing consent rights India has under the 123 Agreement, thereby reopening the possibility of spent fuel piling up again, as at Tarapur.

The NPAS and the Report are requirements of the Hyde Act. Taken together with Mr. Bush’s letter and the State Department’s answers to the House Foreign Relations Committee’s questions on the 123 Agreement, they offer a comprehensive picture of how the executive branch of the U.S. government intends to implement the agreement once it enters into force. Needless to say, the picture is not a pretty one. And though India is still officially committed to the 123’s passage, many in India now believe the Prime Minister should go to Washington to bury the 123 and not to praise it.

The U.S. argument that the fuel supply assurances are not legally binding since the 123 Agreement is a “framework agreement” is patently false. Though the agreement is a ‘framework’ whose implementation requires the drafting of commercial contracts with U.S. firms, this does not rob the commitments of their legal nature. Indeed, the 123’s chapeau notes that the provisions spring from the desire of the U.S. and India “to establish the necessary legal framework and basis for cooperation concerning peaceful uses of nuclear energy.” The use of the word ‘basis’ is important, which is why the U.S. resisted its inclusion during the negotiations with India last year.

This legal basis is required in order to provide sovereign legal protection in the event of such contracts being violated or abrogated for commercial or political reasons, and to balance the legal nature of India’s safeguards commitments. In any case, lifetime supply of fuel for Indian reactors is explicitly mentioned in Article 2(2)(e) on the ‘Scope of Cooperation,’ and in Article 5(4) on ‘Transfer of Nuclear Material.’ And Article 16(3) explicitly says Article 5(6)(c) where the fuel supply assurances are listed will continue to remain in force even after the Agreement is terminated, making it clear that these are legal and not political commitments. If doubts still persist about the legal basis of the fuel commitments, Article 14(8) is still more explicit: “It is not the purpose of the provisions of this Article regarding cessation of cooperation and right of return to derogate from the rights of the Parties under Article 5.6.” When the 123 Agreement explicitly says that the U.S. will not “derogate from the rights” of India “under Article 5.6,” this means the commitments in 5.6 are legally binding. Rights do not spring from “political commitments” and the word “derogate” was used precisely because of the legally binding nature of the fuel supply assurances. Not surprisingly, the U.S. side resisted the inclusion of this sentence, too, during the negotiations. If it conceded the point last July, it was only because it had every intention of repudiating it by the time the approval process was complete.

But the unilateral abrogation of fuel supply assurances is not the only problem with the U.S. interpretation of the 123.

The U.S. is not a fuel supplier and even without the latest American interpretation, India would probably need to tie up supplies from elsewhere to run any U.S. reactor it buys. A more fatal problem lies in the question of consent rights essential to reprocess the spent fuel. For here, no other country can cover for the U.S. With the experience of Tarapur behind it where U.S. consent to reprocess the spent fuel has not come in 45 years, India insisted the 123 Agreement provide this consent upfront. Accordingly, Article 6(3) grants India reprocessing consent. It also says that to bring this right into effect, India will establish a dedicated safeguarded national facility. Since the U.S. said more time was needed to negotiate the technical “arrangements and procedures” under which this facility would reprocess U.S.-origin spent fuel, a period of one year was provided for in the 123 Agreement for their finalisation.

These “arrangements and procedures” are limited to “provisions with respect to physical protection standards … storage standards … environmental protections … and such other provisions as may be agreed by the Parties.” There is no mention anywhere of withdrawal, termination or suspension of consent rights. Article 16(3), in fact, explicitly says Article 6 will continue in force even if the 123 Agreement is terminated, that is, India will never lose the right to reprocess. Although Article 14(9) allows for “suspension” of the “arrangements and procedures” in “exceptional circumstances, as defined by the Parties,” it can lead to the suspension of actual reprocessing activity only if India agrees to include such language in the yet-to-be negotiated “arrangements and procedures.” Unless this is done, the suspension of arrangements and procedures is meaningless because once India’s reprocessing rights are brought into effect, they can only be extinguished or compromised by India shutting down its dedicated facility or violating agreed arrangements and procedures.

Clever legal manoeuvre

The NPAS, President Bush’s letter and the State Department’s answers attempt a clever legal manoeuvre by suggesting that the “arrangements and procedures” are not just a trigger to bring the consent rights into effect but also a switch to affect the duration of this consent. All three documents are also silent about the one-year timeline in which the arrangements and procedures have to be finalised. Whether this silence is tactical, in view of Congressional opposition, or part of a policy rethink remains to be seen. But taken together, these documents clearly hold out the possibility of future termination of consent rights. Indeed, the NPAS explicitly notes that since “Article 14 is not among those continuing in effect if the Agreement as a whole were to be terminated,” the U.S. needs to “suspend the ‘arrangements and procedures’” for reprocessing “prior to termination of the Agreement itself.”

Though India has gently contested these claims, the U.S. Congress will likely give legislative expression to the executive’s interpretations as part of the 123 approval process. Thus, India must prepare itself for the very real possibility of being asked to sign an agreement that Congress would have robbed of its very essence. At that point, silence or gentle protestation will not suffice. Any riders attached to the 123 Agreement would have the status of reservations in international law. Silence by India would be taken as concurrence with these reservations. Ideally, the Prime Minister should refuse to sign it since the implementation protocols on the U.S. side run counter to what was agreed to between the two countries. If he feels he must sign, a separate national statement would have to be issued contesting the U.S. reservation.

Of course, an agreement with orthogonal reservations by the two parties would be meaningless in political or commercial terms. Even if Congress passes the 123 Agreement without attaching riders and conditions, the prospect for bilateral cooperation is dim. This is because the U.S. (or Congress, whose approval under Section 131 of the Atomic Energy Act the administration is committed to seeking) will insist on including suspension of reprocessing consent in the "arrangements and procedures".

The 123 was needed to allow the NSG waiver to be born. Today, it has outlived its purpose. For India, S.K. Jain of the Nuclear Power Corporation (NPCIL) has already pointed out the bottom line: the purchase of reactors must be linked to lifetime supply of fuel and reprocessing rights. If U.S. reactors are ever to make it to Indian shores, the U.S. must change its policy or force India to abandon this mantra. Time will tell whose resolve is going to be stronger.

Don’t sign 123, says former Indian envoy to U.S.

16 September 2008
The Hindu

Don’t sign 123, says former Indian envoy to U.S.

Special Correspondent

New Delhi: Lalit Mansingh, former Foreign Secretary and former Ambassador to the United States, has said India should not sign the ‘123 Agreement’ on bilateral nuclear cooperation if Washington insists on going back on its fuel supply assurances.

His remarks were made on CNBC’s ‘India Tonight’ programme on Monday night.

Asked by the anchor, Karan Thapar, how he would respond to the manner in which America has gone back on its fuel supply assurances if he was foreign secretary, Mr. Mansingh said he would have cancelled Dr. Manmohan Singh’s forthcoming visit to Washington.

Describing the government of India’s reaction to date as mild, Mr. Mansingh said that now that President Bush had sent a ‘determination’ to Congress, the issue could not be considered “internal” to the United States. “It affects the legality of the treaty. Therefore, I felt that may be our response should have been stronger — I would have advised the Prime Minister not to go to Washington to sign the Agreement — if that is [their] interpretation, that it is not legally binding,” he said. “It would diminish the Prime Minster’s credibility if he goes all the way to Washington. I think he should meet Bush when he is at the UNGA and have a bilateral meeting. But to go to all the way to Washington to sign a treaty which already is declared as non-binding won’t be worthy of the Prime Minister’s visit.”

Watch me on the 123 @ CNBC 2230 tonight

India-based readers of this may wish to watch CNBC tonight at 10:30 pm -- Karan Thapar has a 30-minute discussion with Ambassador Lalit Mansingh and myself on the American attempt to renege on their commitments in the 123 Agreement.

Both of us were of the opinion that India should take its business elsewhere now that the NSG waiver is through. I have been saying for some time now that the Americans have reduced the 123 to a dead letter. But Ambassador Mansingh went one step further and said that if he were still Foreign Secretary, he would actually advise the Prime Minister not to go to Washington or sign the 123. Strong stuff indeed. I was, of course, only too happy to echo his advice.

A video link is available in two separate files. Part One is here and Part Two is here.

Bush report says India complying with Hyde Act on Iran

As part of the 123 approval process, the Bush administration forwarded a set of documents to Congress last Friday, including a report pursuant to Section 104(c) of the Hyde Act. The report's portion on Iran is likely to reignite the controversy over the Hyde Act being used by the U.S. to condition and influence Indian foreign policy because of the way it is formulated. India's votes at the IAEA against Iran are described as steps New Delhi has taken to support U.S. efforts, rather than as decisions India took based on its own assessment as the Manmohan Singh government has always maintained.

Of course each government caters to different constituencies and will, therefore, put things differently. But there is a history to the controversy over this issue.

[Flashback: See 'So now we know for sure' on my reporting of a senior U.S. official's admission that India's votes were "coerced"; See also my interview two years ago to Abbas Edalat of the Campaign against Sanctions and Military Intervention against Iran on Rademaker's statement]

At the same time, there is something positive in the latest Bush report too: an acknowledgment for the first time that India's Additional Protocol will necessarily have to differ from the kind of AP that non-nuclear weapon states sign since the entire deal is predicated on India having a set of non-safeguarded, strategic facilities in the first place ...

15 September 2008
The Hindu

Bush report says India complying with Hyde Act on Iran
Agrees that Indian ‘Additional Protocol’ will not be same as for non-nuclear weapon states

Siddharth Varadarajan

New Delhi: In a report to Congress that forms part of the ‘123 Agreement package’, the Bush administration has cited India’s votes against Iran at the International Atomic Energy Agency as part of “several steps” New Delhi has taken “to support the U.S.” in its efforts to “dissuade, isolate, and, if necessary, sanction and contain Iran.”

The report also gives more information about the steps India has taken to fulfil the commitments made to the United States in July 2005 than the United Progressive Alliance government has provided so far.

It reveals, for example, that India has formally committed its adherence to the guidelines of the Nuclear Suppliers Group (NSG) and Missile Technology Control Regime (MTCR) in separate letters dated September 8 and September 9, 2008, an announcement the Ministry of External Affairs has yet to make. The report also cites, as evidence of the steps India has taken to prevent the spread of enrichment and reprocessing technology, a letter sent to the International Atomic Energy Agency by Atomic Energy Commission Chairman Anil Kakodkar on August 18, 2008 in which he indicates India’s interest in participating as a supplier nation in the IAEA’s efforts to establish an international fuel bank. None of this is controversial, though the government’s failure to make this information public is likely to provide ammunition to the Opposition.

Submitted pursuant to Section 104(c) of the Hyde Act, the report is meant to detail the basis for President Bush’s determinations that India has fulfilled its “non-proliferation commitments” to the U.S. and is thus eligible for a waiver from America’s domestic restrictions on nuclear exports to the country.

Section 104(c)(2) outlines 10 subjects where the administration is required to provide Congress with the fullest possible information. Part (G) asks for a description and assessment of the specific measures “India has taken to fully and actively participate in” U.S. and international efforts against Iran “for its efforts to acquire weapons of mass destruction (sic) ... and the means to deliver WMD.”

The report submitted to Congress on Friday says the “Government of India has taken several steps to support the U.S. in this regard and to bring Iran back into compliance with its international obligations, particularly those pertaining to its nuclear weapons programme (sic).” Apart from the IAEA votes, it cites India’s compliance with U.N. Security Council resolutions and its “strong public line of support for P5+1 and U.S. diplomatic efforts to resolve international concerns with Iran’s nuclear program.”

In its summary of the 123 Agreement, the report repeats President Bush’s September 10 formulation that the fuel supply assurances contained within are not legally binding.

In a separate Nuclear Proliferation Assessment (NPA) statement submitted to Congress last Friday, as part of the Hyde Act’s requirements, the Bush administration for the first time acknowledges that the Additional Protocol India will negotiate and sign with the IAEA will be different from what non-nuclear weapon states sign. “Because India will obviously have undeclared activities that are outside the scope of the safeguards agreement, the primary function of its Additional Protocol will not in general be the same as that of the Model Additional Protocol (that of detecting undeclared nuclear activities).” The assessment concludes that India’s AP “will probably provide some additional information or access to the facilities declared as civil, enhancing somewhat the effectiveness of the safeguards” there.

Seeking to allay fears about nuclear cooperation with the safeguarded Indian nuclear sector somehow giving a boost to its weapons programme, the NPA also notes that since “India’s non-civil facilities already include every capability likely to exist among the facilities declared as civil ... India thus would have no apparent incentive to divert material, equipment, or technology from its declared civil sector to military uses.” It adds that India’s non-civil sector already possesses the necessary capabilities “and a diversion would risk a strong reaction from the U.S. and other nuclear cooperation partners.”

On the safeguards agreement, the NPA asserts that although the text “includes preambular language noting India’s ability to take ‘corrective measures’ to ensure uninterrupted operation of India’s reactors, both the U.S. and the IAEA have concluded that the preambular language establishes the historical context of the agreement and does not affect the obligations [on termination of safeguards] which are contained in the agreement’s operational provisions.”

The NPA disputes claims by some critics of the nuclear deal that it would free up India’s own uranium for weapons use. The amount of fissile material available for potential weapons use is a function of not just the amount of natural uranium available, but also of factors such as overall fuel cycle capabilities such as the production of plutonium in reactors and reprocessing, it notes. “In this regard, [under the agreement], several indigenous Indian reactors which in theory have been available to support military programs, will be placed under safeguards and no longer be available for this purpose,” it says.

Finally, the NPA also acknowledges the ongoing dispute between India and the U.S. over the American claim to having certain “vested rights” over the Tarapur reactors despite the expiration of the 1963 bilateral agreement.

India won’t wait for 123 to sign deals with France, Russia

As the 123 goes to Capitol Hill and Bush serves notice that the Bush administration does not consider its fuel supply assurances to be legally binding, Indian sources say riders, amendments will jeopardise the nuclear agreement with the U.S....

14 September
The Hindu

India won’t wait for 123 to sign deals with France, Russia

Siddharth Varadarajan

New Delhi: Despite Washington’s expectation that India will wait for Congressional approval of the ‘123 agreement’ on bilateral nuclear cooperation before concluding deals with other suppliers, the government has decided to sign a landmark nuclear framework agreement with France during Prime Minister Manmohan Singh’s visit to Paris later this month.

Following last week’s waiver for India from the Nuclear Suppliers Group, the Bush administration is now trying to complete the U.S. domestic approval process for the 123 by September 26, when Congress formally adjourns, so that the issue does not require the convening of a special ‘lame duck’ session in December.

But regardless of the fate of the 123, India appears finally to have made up its mind to clinch its deals with France and Russia on a priority basis. “We will go ahead and sign with the French in Paris this month and with the Russians when [President] Medvedev comes to Delhi on December 4,” said an official source on condition of anonymity. The NSG had opened the door and India intended to go through it. Confirming that U.S. Secretary of State Condoleezza Rice had asked India to wait till the 123 was passed so that American companies were not disadvantaged, the sources said India had made no commitment to the U.S. “We have never said we will wait,” the source said, noting that External Affairs Minister Pranab Mukherjee had immediately clarified this issue when his remarks earlier in the week were taken as suggesting otherwise. “As for disadvantaging U.S. firms, the question does not arise because we are talking of a free market and competition,” the source added.

Hitting out at U.S. attempts to revise key provisions of the 123 agreement, the sources said that if President Bush and the State Department did not believe the text’s provisions were legally binding, “why did they put us through seven months of negotiations?” India, the source said, was now waiting to see how the U.S. domestic process got completed. “Let him complete his internal process and then come to us. [But] if the 123 comes with changes or conditions, we’ll see [our options].” Asked whether India might even refuse to sign the agreement if it came with riders that negated its key provisions, the source said, “Let us see. Until we actually sign, nothing is over.”

Washington’s approach, the sources stressed, was making it harder and harder for India to buy American material as and when the 123 was approved. “I think his own companies will now have to deal with him,” the source added.

India, he said, had taken up with the U.S. the contents of Mr. Bush’s September 10 letter to Congress as well as the State Department’s controversial replies to a set of questions raised by the House Foreign Relations Committee on the 123 agreement.

India reacts to Bush kick

So the Ministry of External Affairs has girded its loins and joined the fight (initiated by me in The Hindu yesterday), directly contesting President Bush's September 10 assertion that the fuel supply assurances contained in the 123 agreement are not legally binding:

Response by Official Spokesperson to news report regarding
the Civil Nuclear Initiative

12/09/2008

The Government of India does not comment on domestic political processes in the US or other countries.

In working with the US in civil nuclear cooperation India will be guided by the 123 Agreement alone.

The text of the India-US 123 Agreement has been agreed upon by the Governments of India and the United States. It is a public document. The rights and obligations of both India and the US are clearly spelt out in the terms and provisions of the 123 Agreement. Once this Inter-Governmental Agreement enters into force, the Agreement would become a legal document in accordance with well-recognised principles of international law and the Law of Treaties.

India-US civil nuclear cooperation will be carried out on the basis of the respective rights and obligations of the two sides as contained in the Agreement. By doing so, the Government will ensure that India’s rights are fully protected.

New Delhi
12 September, 2008

This is a good statement as far as the political semiotics of the 123 agreement are concerned. There is a text. Bush says it doesn't apply. India says it does. If the U.S. Congress sits quiet and simply passes the 123 Agreement the way it is, Prime Minister Manmohan Singh could still conceivably sign the agreement in Washington during his visit later this month and not worry too much about the political consequences. But if Congress approves the 123 with some kind of rider or parallel legislative move saying the agreement's implementation will be strictly in accordance with the President's letter transmitting the 123 to Capitol Hill, I don't think Dr. Manmohan Singh will even be able to sign the agreement.

Either way, one thing is sure: As long as there is uncertainty about fuel supplies and reprocessing rights, India (or rather the Department of Atomic Energy) will simply not buy an American reactor.

WaPo's non-news on ENR at the NSG

Glenn Kessler in today's Washington Post has a "sensational" story about how the Nuclear Suppliers Group last week reached a gentleman's understanding about not supplying India with sensitive nuclear technology. Three things here. First, this is not news. I reported this in The Hindu on September 7:

http://svaradarajan.blogspot.com/2008/09/dateline-vienna-nsg-waiver-enables.html

Asked for his assessment of the waiver, a diplomat from a European country which initially wanted much stronger conditional language said his government had joined the consensus "very reluctantly". "I wouldn't say we're happy", he said, adding that his country and several others had been "leaned on at the highest levels".

The diplomat said the final form of the waiver was an improvement over the previous draft, especially the chapeau of paragraph 3 which established what he described as a "strong link" between commitment and action. Nevertheless, his country agreed to sign on mainly because it had received two key assurances during consultations within the various steering committees. First, that no participating government (PG) currently intended to transfer ENR equipment to India, and second, that PGs would take India's compliance with its commitments into account before agreeing to any nuclear transfers. The diplomat added that his government, and many others, had reiterated these assurances in their national statements before adoption of the waiver decision. Though there was no separate chairman's statement elaborating these assurances, the diplomat said the national statements now formed part of the NSG's internal records and could always be referred to in the future.

Second, this was not an 'agreement' within the NSG plenary but an informal assurance provided by some supplier countries, in an ad hoc steering committee, that they had no "current" intentions of transferring ENR items to India. Third, a number of countries tried to have a chairman's statement reflect these assurances but this was resisted by others and no such statement was made...

But Kessler is right (or rather the non-pro U.S. officials who gave him this story are right) that the NSG will likely adopt future guidelines formally restricting access to ENR. These guidelines could involve NPT membership, non-replicability, adherence to the Additional Protocol and tighter safeguards measures. Consensus on all of these won't be easy, except for NPT membership. Ensuring new guidelines that block access are not adopted will be tomorrow's major challenge for Indian diplomacy.

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.