26 April 2007

Fall-back safeguards, NSG, sequencing remain areas of concern in nuclear talks

Here is the second and concluding part of my exclusive behind-the-scenes look of the obstacles lying in the way of the India-U.S. nuclear agreement.

26 April 2007
The Hindu

Fall-back safeguards, NSG, sequencing remain areas of concern in nuclear talks

Siddharth Varadarajan

New Delhi: Apart from big-ticket obstacles like the "right of return" and fuel supply assurances, negotiators from India and the U.S. have not managed to bridge their differences on the sequencing of next steps in the implementation process for the Indo-U.S. nuclear deal as well as on "fall-back safeguards" as a condition for the sale of nuclear equipment and material.

And lurking behind these issues is the question that worries Indian officials the most: when and in what form will the 45-nation Nuclear Suppliers Group amend its guidelines to allow commerce with India.

The NSG factor

The importance of the last question was driven home to the Indian side when they had a formal interaction with the NSG troika of Brazil, South Africa and Germany on the sidelines of the nuclear cartel's annual plenary in Cape Town last week. Though officials say the meeting was "positive," the perception is growing in New Delhi that the U.S. is playing both sides on the NSG. "They are committed to pushing our case," said an official, "but they are also not averse to egging on some delegations to tag on extraneous conditions."

One Indian official summed up the picture at the NSG for The Hindu in the following way. There were, he said, three contradictory pressures.

"First, the U.S., which has the most stringent conditions for export to India, would ideally like to replicate those conditions at the NSG so that American companies are not disadvantaged vis-à-vis others. But there is also a push back from Russia and France, who are not interested in implementing these kinds of conditions." The third pressure was more complex, he argued. "While the U.S. is pushing to have its way, it also knows that if it pushes too hard it, it may lose control over the process to countries like Sweden and New Zealand, which would then try and overload the process with non-proliferation goals to the point that there would be no possibility of nuclear commerce." The fact that some NSG members are saying they may need to seek "legislative approval" within their own country before voting to alter the cartel's guidelines for India is not a good omen, another official said.

In other words, New Delhi fears the U.S. might lose control of the NSG, just as it feels the White House lost control over the Hyde Act process in the run up the law's passage last year.

The "pre-decisional draft" of the changed NSG guidelines circulated by the U.S. last March was pretty straightforward, running to less than one page. Though it sought to make the relaxation of guidelines for India conditional on observance of the nuclear test moratorium, there was no reference to retrospective penalties in the event of an Indian test. But with the U.S. pushing hard to include what Indian officials say are "extraneous conditions" in the bilateral nuclear cooperation agreement like the "right of return," the fear is that these conditions would then be carried forward to the NSG.

Fall-back safeguards issue

One area where this carry-forward process has already happened is on fall-back safeguards, which were adopted by the NSG in June 2005 on the eve of the Indo-U.S. nuclear deal and notified to the IAEA a year later.

But while traditional suppliers like Russia are unlikely to insist on the negotiation and implementation of fall-back safeguards, Indian officials believe the U.S. can and will invoke any rights it gets pursuant to such an arrangement. Indeed, the report appended to the Hyde Act makes it clear that the proposed bilateral safeguards layer is not intended to cover a catastrophic situation like the dissolution of the IAEA but for situations where the U.S. feels the Agency is not doing enough to monitor the Indian programme.

"India is fully prepared to abide by IAEA safeguards and has no intention of diverting material," a senior Indian official said. "But let us think of a scenario in which the U.S. goes to the IAEA and says, `We think you should made 20 inspection visits in India this year instead of the planned 10,' and the IAEA says, `we don't have the budget or manpower so the best we can do is 12.' Then the U.S. would invoke its right under its proposed 123 agreement to verify India's compliance with its safeguards obligations. This India is not prepared to accept," the official explained. "The Prime Minister has said so in so many words."

Asked about China's willingness to grant Australia site visits to reactors using Australian uranium as part of a bilateral arrangement, officials say the two situations simply can't be compared. "As a nuclear weapon state, no Chinese uranium conversion facility is covered by IAEA safeguards and many of their other facilities are also not safeguarded or actively monitored. So instead of accepting the more stringent IAEA safeguards - which we say we are prepared to do - the Chinese have given the Australians this sop of site visits," the official argued.

Problems of sequencing

As the end-game approaches, the Indian side also says it is coming under renewed U.S. pressure on the sequencing of next steps. In particular, the U.S. wants India to take its safeguards agreement talks with the IAEA all the way up to formal approval by the IAEA board before presenting the final 123 agreement to Congress for approval.

This American insistence has also led some members of the NSG to demand that the cartel not alter its rules until the IAEA Board first approves India's safeguards agreement.

Given the political nature of the approvals process by the IAEA Board, Indian officials are not at all happy with this proposed sequencing. "Once the Board approves a safeguards agreement, it is more or less frozen, and it would be next to impossible to make changes," one official said. India, he added, had no problem bringing its safeguards agreement up to the point where it was ready to be presented to the Board but wanted to wait for NSG and U.S. Congress clearance first before submitting the document to the IAEA Board for approval.

"Quite frankly, the U.S. ideas on sequencing make no sense," a senior official said. "Is the U.S. prepared to approve the India-specific safeguards agreement in Vienna when its own Congress has still not approved the bilateral cooperation agreement with India?" But U.S. negotiators are citing the Hyde Act, which stipulates that all steps barring India's signature on its safeguards agreement must be completed before the 123 agreement can be approved.


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