US, India Hope to Resurrect Moribund Nuke Deal

Indian Prime Minister Narendra Modi flies to Washington, DC later this month hoping to be able to resurrect the comatose and controversial US-India civilian nuclear pact scuppered since 2008 by political obstructionism and dissonance over the details.

The US-India Civil Nuclear Agreement signed between the Bush Administration, and the Congress government was considered a significant development, according India the status of a nuclear power when the country was considered a pariah for ignoring the global Nuclear Non-Proliferation Treaty. Under the terms of the deal, the US agreed to cooperate fully with Delhi in the critical area of civilian nuclear energy, with the latter separating its civil and military nuclear facilities and placing all its civil nuclear facilities under the International Atomic Energy Agency safeguards. Bush offered India civil nuclear technology and access to uranium, the fuel it needed for nuclear power reactors.

Experts attributed the realization of the deal to the US's evolving view of India as the leader of the non-aligned group and a responsible power that could be trusted with nuclear power generation and its peaceful use. However, also guiding Washington was its insecurity over Delhi's long-lasting tilt towards Russia for military cooperation and over China's rise in Asia. This geopolitical dynamic propelled the Bush administration to lure India into the West’s camp as a bulwark against Beijing and Moscow.

However, initial euphoria over the deal soon gave way to stiff opposition in India from activists and opposition parties in India who argued that India shouldn't forget the lessons of the horrific Union Carbide gas leak in Bhopal in 1984, which killed or maimed thousands of innocent Indians due to the negligence of the Texas-headquartered Union Carbide chemicals producing company. Union Carbide got away with paying paltry compensation to victims, leading to demands that Union Carbide officials be extradited to India.

The disaster led to public pressure on the government to weave in a clause in the treaty that nuclear suppliers be held fully accountable for the quality of their wares, anathema to American vendors. Nonetheless, the Indian government still put in a new clause demanding that the operator be solely held responsible for a nuclear mishap.

Matters worsened with the Civil Liability for Nuclear Damage Act, 2010 which opened suppliers to tort claims indirectly through the operator. Though Delhi has maintained that the clause is not applicable to suppliers, nuclear vendors remain wary of the ambiguity.

Opposition to the agreement became more entrenched with the earthquake that caused disaster at the Fukushima nuclear plant on the northeast coast in 2011.That not only increased the cost of building nuclear power plants but also resuscitated the global anti-nuclear campaign. Japanese authorities estimate it will take 40 years to clean up the disaster.

The deal's non-implementation has rankled US protagonists, especially the US Congress which had backed India to the hilt in 2008 against the non-proliferation lobby. American nuclear energy companies that were looking to fat profits with the deal's implementation were also disenchanted. The negativity over the deal also cast a shadow on the otherwise buoyant US-India bilateral relations.

This is the impasse which Obama and Modi are hoping to resolve this month a the fourth Nuclear Security Summit in Washington. Ministerial sources told Asia Sentinel that India and the US are engaged in price negotiations to close a signature deal between Nuclear Power Corporation of India Limited (NPCIL) and Toshiba-Westinghouse (T-W) for six nuclear reactors.

Although no official statement has emerged yet, both Delhi and Washington are seeking closure as this is the Obama administration’s final year. Modi too, is keen to show tangible results from his high-profile US engagement at a time his image back home has received a battering from Hindu hard-line forces hijacking his developmental agenda.

US Ambassador to India Richard Rahul Verma said he is confident that the deal may be sealed this year. "I actually think in the first six months of 2016, you'll see a lot of activity,” Verma told local media. “We really have had good discussions with the Department of Atomic Energy, NPCIL (Nuclear Power Corporation of India Limited), and the Prime Minister's Office, and everyone wants to see us move toward implementation."

Though some analysts remain sceptical, many are hopeful that it will soon see the light of day. This logic is premised on the fact that without nuclear power, India's ambition to meet its developmental goals will be well-nigh impossible.

"Modi has outlined an environmentally-friendly approach for Indian development factoring in climate change, air quality, and other environmental concerns. Without nuclear power, the country can't meet these goals or keep the economy growing robustly," said New Delhi-based nuclear energy expert and consultant with Reliance Energy Dr. Rohit Prabhas.

However, Prabhas cautions that Delhi's last-mile efforts to seal the deal won't be a cakewalk given its troubled provenance and trajectory. The matter isn't helped by Delhi's wool-headed approach to the national nuclear policy.

"Delhi's record of treatment of foreign nuclear energy vendors hasn't exactly been encouraging,” a government bureaucrat said in a telephone interview. “Areva has stalled the pace of its nuclear project at Jaitapur over the liability law while General Electric too, has announced that it will not invest in the Indian nuclear market till the country's nuclear liability law meets international standards. All this augurs ill for this crucial industry."

Domestic production too, is in a complete mess due to political or bureaucratic inefficiencies, trouble with land acquisition or protests and litigation. Currently, only six reactors are under construction in the country. All have experienced significant delays in construction. An intergovernmental agreement between India and the Soviet Union was signed in 1988 but construction only began in 2002. Gorakhpur was sanctioned in 1984, but became operational only in 2014.

India's unwelcome approach to nuclear vendors is in direct contrast to China's which provides a conducive investment climate. Of late, investors have opted for China, bypassing India. GE is collaborating with China on its AP1000 technology and Bill Gates' TerraPower has also struck a deal with China National Nuclear Corporation to build the first of a new generation of wave reactors that use depleted uranium as fuel.

It is not yet known how nuclear vendors may take to the deal's finer points once they're hammered out by Modi and Obama. If Delhi's guarantees are sufficient for them, the Indo-US nuclear deal may well become operational. But for that, Modi will need to channel all his diplomatic skills as well as political acumen to achieve a breakthrough.

Neeta Lal is an award-winning senior journalist based in New Delhi