06 March 2009

Reprocessing request is the first test of nuclear deal under Obama

India has put in a formal request for talks and the U.S. has till August 2010 to work out ‘arrangements and procedures’. Given the experience of Tarapur, the Indian side is unlikely to accept any ambiguity over its ability to reprocess American spent fuel in the future and failure to reach agreement will jeopardise the prospect of American reactor sales to India ...

6 March 2009
The Hindu

Reprocessing request is the first test of nuclear deal under Obama
India, U.S. have till August 2010 to work out ‘arrangements and procedures’

Siddharth Varadarajan

New Delhi: India has formally asked the United States to negotiate the “arrangements and procedures” under which American spent nuclear fuel will be reprocessed in the country, presenting the Obama administration with its first test of how committed it is to the India-U.S. nuclear agreement.

The request was made last month, senior officials told The Hindu.

Under the terms of the ‘123 agreement’ on bilateral nuclear cooperation, Washington has six months to begin consultations and one year after that to reach an understanding with Delhi. “The clock has started ticking,” an official said. “We have till the end of August 2010 to finalise an agreement.”

The 123 agreement gives India prior consent to reprocess but stipulates that this right will come into effect only when India establishes a new national facility dedicated to reprocessing safeguarded nuclear material under IAEA safeguards and reaches an agreement with the U.S. on “arrangements and procedures under which such reprocessing … will take place in this new facility.”

On February 3, Foreign Secretary Shiv Shankar Menon wrote to Under Secretary for Political Affairs William Burns invoking this provision and asking the U.S. side to propose dates and an agenda. A similar letter was also sent from the Department of Atomic Energy to Richard Stratford, head of the State Department’s Office of Nuclear Energy and Washington’s pointman for nuclear negotiations with India.

The request is important for two reasons. First, because it will provide the first indication of how President Barack Obama intends to balance traditional American ‘non-proliferation concerns’ about reprocessing with the broader geopolitical interests underpinning the strategic partnership with India. And second, because the prospects of American companies winning a slice of the multi-billion dollar Indian market for nuclear energy depends crucially on India being satisfied that it will be able to reprocess the spent fuel which accumulates from the running of U.S.-supplied reactors.

Last January, Atomic Energy Commission Chairman Anil Kakodkar explicitly told a delegation of the U.S.-India Business Council — which included many representatives of the American nuclear industry — that there would be no reactor purchases without reprocessing.

Shortly after that meeting, Ted Jones of the USIBC told the Washington Post that Dr. Kakodkar had said commercial ties could commence “only after talks about reprocessing rights are concluded.”

If the State Department’s Bureau of Non-proliferation — likely to be headed by Robert J. Einhorn — plays a role in the process of formulating reprocessing arrangements and procedures, the proposed talks could hit an early roadblock. Mr. Einhorn fiercely opposed the nuclear agreement with India ever since it was first unveiled in 2005.

At the same time, the default position bequeathed by the Bush administration is not without problems for India either. In answers to questions from Congress last year, for example, the State Department and the Bush White House said that reprocessing consent rights for India would not be permanent and could be rescinded.

Given the negative experience of Tarapur, where a vast acreage of spent fuel has accumulated following Washington’s decades-long refusal to endorse reprocessing, the DAE is unwilling to accept any future ambiguity in this regard, especially when the U.S. is looking to sell several thousand megawatts worth of reactor capacity to India.

Since Russian and French reactor exports to India come bundled with reprocessing consent, Washington’s failure to conclude an agreement on reprocessing arrangements and procedures to the DAE’s satisfaction would be tantamount to freezing U.S. vendors out a market that the U.S. itself was instrumental in reopening.

Though the 123 agreement treats the dedicated, safeguarded national facility and the reprocessing arrangements and procedures as two separate preconditions, some U.S. officials have argued in the past that India must first come up with a design of the proposed new facility before detailed consultations on reprocessing can begin.

India, however, sees no link between the two.


Anonymous said...

This is going to be an interesting issue. Obama admin. is against the idea of burying their nuclear waste in Yucca mountains. There is a strong nuclear non-proliferation lobby who consider that reprocessing is detrimental. There is a push for nuclear energy renaissance through GNEP (which cannot succeed in the long term without a policy decision on nuclear waste). At the same time "green energy" is the admin's highest priority. How much will Obama's admin yield to nuclear reprocessing for India ?

Anonymous said...

US admin's inclinations towards reprocessing for India will most likely be tied to the admin.'s policy towards the GNEP program. If that falters for non-proliferation reasons, then India may not get favourable response quickly. If the GNEP program is on fast-track then India may not get a quick/positive response because of technology-competition reasons. If Obama's admin is favourably inclined to GNEP then potentially India can join the GNEP in future as an advanced technology nation possessing fuel recyling capabilities and thus satisfy its reprocessing interest and American business interests. Whether US will be willing to defacto accomodate India into GNEP club may very well influence the decison on the reprocessing consent.

Ravi Kiran said...

I wonder if US has any option . But to this day my spinal cord freezes if i think why is US being so generous with us? What is the design ????

Sid said...

@ Anonymous

Even the Bush administration did not put India on the "supplier" side of the GNEP equation. The Indians were told that this was because they refused to place the breeder reactor under safeguards. I doubt Obama will adopt a more liberal policy.

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kuldeep singh chauhan said...

the focus of indian diplomacy should now be on getting the GNEP "fuel supplier nation" status which would enhance the mutual interests of US & India.

Anonymous said...


I don't see any logic with connecting the breeder program with being a member of GNEP. If US fears India will proliferate with the recycled fuel then it can do so even now with French and Russian fuel. Can't there be a middle ground position where India doesn't have to be a "supplier" to the world but just a "supplier" to its own needs of managing its waste and yet be a member of GNEP ? The non-proliferation issue is just a bogey. It is the advanced reactor and reprocessing technology denial that is preventing US from accommodating India to GNEP. US knows that the future of big business is in the ability of developing advanced technologies and what is happening is that a a new kind of technology denial regime is being set-up for nuclear energy.

Anonymous said...

Note how international cartels of technology co-operation/collaboration and development will be setup centered on the model of GNEP based on the exclusion of India. No doubt indigenous development is good, but not at the expense of international cooperation on joint-technology development projects of potential commercial benefits.

Anonymous said...


Despite Historic Pact, U.S. Firms Are Hampered in Setting Up Reactors in India

By Rama Lakshmi
Washington Post Foreign Service
Wednesday, January 21, 2009; A06

NEW DELHI -- It took three years of diplomatic wrangling to get a controversial agreement signed late last year to allow India to participate in global civilian nuclear trade, but U.S. business executives now say there are more hurdles to overcome before they can start setting up reactors and selling fuel to India.

The largest-ever business delegation from the United States met with high-level Indian officials, lawmakers and nuclear executives last week and pored over the fine print in the historic agreement . Some executives said it would take at least two to three years to jump through the bureaucratic hoops, complete the commercial negotiations and sign the contracts.

"The passage of the 123 Agreement into law was a herculean task," said Ted Jones, director of energy, environment and enterprise with the visiting U.S.-India Business Council, referring to the nuclear accord. "But now we are seeing how much work remains to be done, and the challenge may be equally great on the U.S. side. We thought we would get down to business sooner."

Many of the delays involve U.S. nuclear companies that must comply with stringent U.S. laws that prevent them from sharing details of their technology with Indian partners before bureaucratic approval. Another is India's insistence that the United States allow it the right to reprocess spent fuel before American companies can sell reactors and fuel to India. Additionally, India needs to pass laws covering liability and patent protection before U.S. companies can do business. Rival companies from France and Russia, which do not have such restrictions, appear to be racing ahead, executives said.

Last year's nuclear agreement between India and the United States sought to end India's 34-year nuclear isolation. It was passed after the 45-member Nuclear Suppliers Group in Vienna revoked a global ban on nuclear trade with India. The landmark deal had been expected to generate business worth more than $100 billion and potentially tens of thousands of jobs in both the countries in the next two decades, when 63,000 megawatts of nuclear power will make up 7 percent of India's total power generation.

India conducted nuclear tests in 1974 and 1998, earning international sanctions, and has not signed the Non-Proliferation Treaty. India continues to produce fissile material.

As India prepares for national elections in April, the outgoing government appears to have little time to begin the process of enacting a nuclear liability law that facilitates compensation in the event of a catastrophic accident. "The liability law is a major initiative and cannot be rushed just because American companies are in a hurry. India is a democracy, and there will be a thorough Parliament debate and approval. There is not enough time before the election to do this," said Mabel Rebello, a lawmaker who met the delegation.

Rebello said the issue is particularly sensitive because of the messy experience of compensation when poisonous gas leaked from the Union Carbide factory in Bhopal in 1984 and killed more than 14,000 people. Unlike Americans, state-owned French and Russian nuclear companies do not require these laws to do business because they can claim immunity.

"The simple reality is that the French and the Russians are ahead of us. They know the sites that have been identified for them to set up business," said R. Michael Gadbaw, a member of the delegation and a professor at Georgetown University Law Center. India has assured the United States that it will give at least two sites to U.S. companies to generate a minimum of 10,000 megawatts of nuclear power. But Gadbaw said the U.S. companies do not know where those sites are. Another hurdle is amending India's atomic energy law to recognize patents for private companies. An amendment to this law may take more than a year.

On the U.S. side, companies need to comply with "Part 810" licensing requirements that govern all commercial nuclear exports. "The 810 is a permit that is required to ensure that there is no re-transfer of American nuclear information and technology from safeguarded to non-safeguarded facilities within India," said Meena Mutyala, vice president of global growth and India business leader of Westinghouse. "These are little bumps we have to walk through."

In meetings with potential partners in India, sources in the delegation said General Electric and Westinghouse kept hitting roadblocks. "We are open to talks, but there are restrictions in the American law that prevents their companies from talking openly about technical specifications of their product. And we need this information in commercial negotiations," said Sudhinder Thakur, executive director of the Nuclear Power Corp. of India, a state-owned company that has a monopoly on nuclear power generation.

Daryl G. Kimball of the Washington-based Arms Control Association said the U.S. government is still working with its counterparts in India to ensure that technology transfers can be monitored all the way through to the end-user and then certified as complying with U.S. law. But perhaps the most challenging and basic obstacle between the two governments is granting India the right to reprocess spent fuel, which India needs for its three-stage breeder reactors. Reprocessing also entails the risk of proliferation.

Jones, the U.S.-India Business Council director, said the chairman of the Atomic Energy Commission, Anil Kakodkar, told the U.S. executives that commercial ties can commence only after talks about reprocessing rights are concluded. "This means that some of the American nuclear fuel suppliers will not be able to make some very near-term sales of uranium to India directly. And India needs fuel desperately," Jones said. "But the official was clearly using this as a leverage to get the reprocessing rights."

A representative of a U.S. nuclear company who asked not to be identified said that reprocessing consent is likely to be more difficult under the new U.S. administration which may include many "nonproliferation czars."

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© 2009 The Washington Post Company

Anonymous said...

India must always keep its reprocessing tech and rights and never ever sign things like FMCT , CTBT , NPT etc..or any other such agreements with their contents as we need fissile material for nuke weapons in future in PERPUTITY. If sell outs in congress or other "agents" try to spin India into these things they need to be identified and their abilities castrated , branded as anti nationals.