Nuclear deal: win-all situation for US
by Sudhir Vombatkere on 01 Aug 2008 0 Comment

The Indo-US nuclear deal, also called the 123 Agreement, is for cooperation between India and USA on the peaceful uses of n-energy. The UPA government claims it is will ensure India’s energy security through assured supply of uranium from the Nuclear Suppliers Group (NSG) to operate the yet-to-be-constructed n-power reactors, by liberating India from the sanctions (“nuclear apartheid”) imposed after Pokharan I and Pokharan II.


It was precisely these sanctions that resulted in India’s independent n-programmeme, and it goes to the credit of our nuclear scientists and engineers that India has indigenously constructed n-power reactors and made advances in fast-breeder reactor technology in pursuance of Mr. Homi Bhabha’s three stage long-term nuclear programmeme. Having exploded two n-devices, India is a de facto nuclear power, and with an impeccable record of non-proliferation and an internationally acclaimed policy of no-first-use of its n-weaponry.


India-US Nuclear Agreement


The Left parties were critical of the n-deal from the outset, pointing out that it was not a part of the agreed common minimum programme, which was the basis for their support to the UPA government. They maintained that:


1.      N-energy will not provide energy security because, with the declared target of 20,000 MW of n-power by 2020, India will increase its n-component of total generated power from the present 2.9% to merely 8 or 9 %.


2.      The high financial costs of this small augmentation could be better spent by using other cheaper sources of fuels already available in India.


3.      The n-deal was over-shadowed by the provisions of the Hyde Act of January 2006, an India-specific legislation (titled “Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006“) that visualizes India having a foreign policy congruent with that of USA and actively participating in USA’s efforts even to implement sanctions against Iran if that country should not conform to USA’s checks on acquisition of n-weapons.


The first two objections of the Left parties concern India’s energy security, which is the main reason for which the UPA claims it is pushing the n-deal, and which is a matter internal to India. Yet it has pronounced global effects in the form of $100 billion worth of business in India over the next ten years for US business houses in the nuclear industry, such as Westinghouse Electric and GE Energy.


The third objection of the Left parties was widely seen as a manifestation of their antipathy to all things American, and hence needs to be viewed from a careful reading of the text of the documents.


The Hyde Act states:

It is the sense of Congress that ... (6) it is in the interest of the United States to enter into an agreement for nuclear cooperation arranged pursuant to section 123 of the Atomic Energy Act of 1954 (42 of U.S.C 2153) with a country that has never been a State Party to the NPT if ... (B) the country has a functioning and uninterrupted democratic system of government, has a foreign policy that is congruent to that of the United States, and is working with the United States on key foreign policy initiatives related to nonproliferation.” [Emphases added].


The Hyde Act also states in Section 103, Statements of Policy:

The following shall be the policies with respect to South Asia: ... (4) Secure India’s full and active participation in United States efforts to dissuade, isolate, and, if necessary, sanction and contain Iran for its efforts to acquire weapons of mass destruction, including a nuclear weapons capability and the capability to enrich uranium or reprocess nuclear fuel, and the means to deliver weapons of mass destruction.” [Emphases added].


Obviously the US Congress believes that striking a deal with a country with a foreign policy congruent to its own would be beneficial to USA; it would not enter the n-deal for India’s benefit alone. India, as a founder of the Non-aligned Movement (NAM) has had a foreign policy essentially crafted by Mr. Jawaharlal Nehru, and it has been the American case that India has been cool towards them while warming up to the erstwhile USSR. [This ignores the fact that India signed a mutual defence treaty with USSR in the months leading up to the birth of Bangladesh because of USA’s support to Pakistan, displayed in the threatening presence of its Seventh Naval Fleet in the Bay of Bengal during the 1971 war].


That USA is applying pressure on India to mould its foreign policy is borne out by three incidents: 1] when USA put pressure on India, as a result of which it voted against Iran at the IAEA when it could have just as well have abstained; 2] when USA “advised” India against making a contract with Iran for the IPI gas pipeline; and 3] when Nicholas Burns said that the current n-deal would have been unthinkable in Jawaharlal Nehru’s time. It remains to be seen in what timeframe the congruence in foreign policy will be engineered and achieved.


The second part of the quote from the Hyde Act is a statement of policy. USA aims to secure India’s full and active participation in acting against Iran with respect to the latter’s nuclear programme. Yet IAEA Chief El Baradei stated after Agency inspection that there was no evidence of a n-weapons programme. At this stage, it must be recognised that Iran has a right to enrich uranium for its n-power programme as part of Article IV of the NPT to which Iran is a signatory, and also that India has historically had mutual cultural ties and good relations with Iran.


India worsening its diplomatic position with Iran for a better position with respect to USA, would pit another country in the region against India, and worsen her already tenuous position, surrounded as she is by nations that are failed or failing states. The advisability of the n-deal needs to be carefully re-considered in a strategic South Asia context, even if it is actually in the interest of India’s energy security.


Despite all this, the UPA government insists that n-energy is vital to India’s energy security, and evades discussion on the issues of contribution to the gross power capacity and the high cost of generated n-power. UPA holds that the Hyde Act would have no effect on the 123 Agreement as it was internal to USA and hence not applicable to India. Yet it is clear that the Hyde Act was legislated with India in mind (as the title suggests), and it is difficult to fathom why the Hyde Act was at all needed unless the n-agreement with India was contemplated. The Hyde Act clearly spells out the US Congress attitude towards India, which it views as a country with democratic values that can be induced to make its foreign policy “congruent to that of the United States”.


The provisions of the Hyde Act do and are intended to bind USA to make efforts to implement its national policy - to bring as many countries under its influence, if not control, for its global designs, not least of which could be the Plan for the New American Century mooted in President Clinton’s tenure. The effects of USA’s global actions over the past decades, particularly during the tenure of President George W. Bush, are available for all to see; a wag quipped that it is dangerous to be USA’s enemy but fatal to be its friend!


Win-all for US in South Asia


Several things have happened in the recent past in South Asia. US support to Pakistan in the “war against terror” has run out of steam as democratic forces have pushed President Pervez Musharraf to the sidelines, resulting in a fall in US influence in Pakistan as of now.


As China has very recently laid claim to parts of Sikkim and Arunachal Pradesh, ties between India and China are not about to improve. Bland MEA statements notwithstanding, this is a matter of serious concern to India. Hence, it is to America’s advantage to appear as India’s supporter against China, as China and Pakistan are both India’s neighbours and have mutually close ties, including vis-à-vis Pakistan’s n-programme.


China’s Gwadar port in Pakistan at the northern tip of the Arabian Sea bordering Iran upsets America’s designs in Central Asia and can pose a strategic threat to US shipping in the Gulf. The inter-governmental mutual-security organization among China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan (Shanghai Cooperation Organization of 2001) is a source of discomfort to USA. This together with the establishment of the Iran Oil Bourse that trades oil in euros, Russia’s plan to start its own oil trade in roubles or euros, and several other countries making tentative moves to trade oil in euros, puts USA in a state of dollar insecurity; added is fear of terrorist attacks on the US mainland.


Globalization has resulted in US MNCs physically transferring their manufacturing infrastructure to countries where input and regulatory costs are lower, and hence profits higher. India’s environmental and land laws having been relaxed in the recent past, the most basic resources like land, water and minerals are more readily available for exploitation by MNCs to repatriate profits, while leaving behind social ill-effects, pollution and environmental degradation.


At the same time, as US MNC investments are being made abroad and thus providing less investment at home, an increasing proportion of investments into USA are being directed to finance consumer debt, provide tax breaks to MNCs, and pay for the ruinous wars in Afghanistan and Iraq.


Today America’s net borrowing stands at a record US$254 billion. Countries like China and India are among USA’s creditors, holding US Treasury Bills as security. Should a large value of US Treasury Bills be presented to USA for the US dollars that they represent, it may create a collapse of the US dollar and a sudden steep rise of the already rising euro, with unpredictable economic, political and military consequences. [Way back in 1971, several countries tried to simultaneously sell a small portion of their dollars back to USA for the gold that the dollar then guaranteed. USA defaulted, and on August 15, 1971, unilaterally severed the link between the dollar and gold].


Strategic thinkers argue that USA’s security is best achieved by “containing” China, much as USSR was contained in the past. To this end, India presents itself as a convenient foothold in South Asia, where USA can do business and also gain access to facilities for “lily-pad” bases for military transit and refuelling for military interventions in this part of the globe. Such military advantage is in consonance with the growing military cooperation between India and USA following the 1995 pact with the Narasimha Rao government.


N-cooperation with India presents an opportunity for America’s ailing civilian nuclear industry. If the India-US n-deal goes through, it will provide USA with not only a reliable physical presence in South Asia (not possible in Pakistan as the US views Islamic countries as inherently unfriendly, a sentiment heartily reciprocated), but with an ally for its foreign policy. India’s burgeoning middle class is a huge market for US MNCs to make and repatriate profits.


For America, therefore, the India-US n-deal will kill several birds with one stone. Washington’s keenness for the deal has amply been demonstrated in frequent exhortations, most recently President Bush’s message to Dr. Manmohan Singh, egging him on to “soldier on” against internal opposition.


What the deal will really do for India in terms of energy security and to India in terms of her independent foreign policy, only time will tell.


The author is a retd. Major General and environmentalist in Mysore

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