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Bush sends nuclear deal to US Congress – Invites Prime Minister Singh to Washington

	September 15, 2008

In a flurry of developments, President Bush has sent the 123 Agreement to the US Congress and invited Prime Minister Manmohan Singh to the White House on Sept. 25 when the two may sign the pact if it is approved by then. Dr. Singh, who will go to the United Nations to attend the General Assembly session, will travel to Washington for the meeting. In the meanwhile, US Secretary of State Condoleezza Rice is busy meeting powerful Democratic and Republican players in the US Congress, seeking their help for the ratification of the agreement. But, a report in the WASHINGTON POST saying that the 45-nation NSG before granting waiver in favour of India had reached a secret understanding not to sell sensitive technologies to India, and a statement by President Bush that the American commitment on reliable supply of nuclear fuel was not legally binding, has created fresh doubts in the Indian mind about the sincerity of the NSG members.



In an all-out bid to operationalise the three-year Indo-US civil nuclear deal, President Bush sent the text of the accord to Congress on Sept 12 with a request that it be approved “this year” – before he demits office in January. In a communication to the Speaker of the House, he said, “I have determined that its performance will promote, and will not constitute an unreasonable risk to, the common defence and security. Accordingly, I have approved and I urge that the Congress also approve it this year.” The agreement, he said, will reinforce the growing bilateral relations between the two vibrant democracies. “The US is committed to a strategic partnership with India. The Agreement promises to be a major milestone in achieving and sustaining the goal”, he said.



In a bid to quicken the process of Congressional nod for the nuclear deal with India, Condoleezza Rice met two key Democratic and powerful players – Nancy Pelosi and Howard Berman – on Sept. 10 and discussed how they could help Congress ratifying the 123 Agreement before the end of the session on Sept. 26. While Nancy Pelosi is the Speaker of the House of Representatives, Berman is the Chairman of the House Foreign Relations Committee and a strong critic of the Indo-US nuclear deal. Pelosi’s spokeswoman later said, she proposes to consult Chairman Berman and members of the leadership in determining the appropriate course of action. In her meeting with Berman, she is believed to have discussed the modalities for winning Congressional approval for the nuclear deal in the current session of Congress which is due to end on Sept. 26. Berman had earlier warned Congress not to rush through the 123 Agreement until the Bush Administration proved that it did not cut any “side deals” at the NSG meeting to get the India-specific waiver.



Rice has also spoken to other key lawmakers such as Senator Joseph R. Biden, the Democratic Chairman of the Senate Foreign Relations Committee, House Minority Leader John Boehner, Senate Minority Leader Mitch McConnell and Republican Congresswoman Illeana Ros-Lehtinen, who is Republican co-chair of the House Foreign Affairs Committee.



Rice said earlier on Sept. 7 that noting that the time is very short, she had already talked several weeks before the NSG’s Vienna meeting “to relevant committee chairs about trying to get it done”. She said her latest meetings with them was to try to see whether the leadership believes that this can go forward.



Key lawmakers have indicated that they are open to a fast-track vote if the Administration convinces them that it conformed to the Hyde Act passed by Congress. In one such development, Congressman Howard Berman, whose release of the Bush Administration’s “secret” letter last week muddled the issue, reiterated that he supported cooperation on civilian nuclear energy with India, but is opposed to policies that would lead to a nuclear arms race or undermine proliferation standards.



Congress needs to study the NSG decision along with any agreements that were made behind the scenes to bring it about. If the administration wants to seek special procedures to speed congressional consideration, it will have to show how the NSG decision is consistent with the Hyde Act as the Secretary promised including which technologies can be sent to India and what impact a nuclear test by India would have, said Berman.



All eyes are now on Capitol Hill where the 110th US Congress reassembled on Sept. 8 for its last scheduled session. The Henry Hyde Act stipulates that Congress will consider the agreement for ratification when President Bush sends his determination along with three documents - the 123 Agreement with India, the India-specific waiver by the IAEA and the NSG waiver. The present session would last until September 26, the target date for adjournment before politicians and people in the US get immersed in preparation for the November elections. The Hyde Act also stipulates that since the Presidential determination is made, Congress be in 30 days of continuous session for it to consider. During this period, the Committee of Jurisdiction, particularly the US House Committee on Foreign Affairs and the Senate Foreign Affairs Committee will have time to hold hearings and report it out.



Technically, Congress does not have as many days as required, though the Hyde Act enjoyed bi-partisan support. Whether this process could be speeded up will largely depend on the mood of the leadership of the Democrats-controlled Congress.



Last year, Howard Berman, Democrat from California, introduced a resolution that expressed the sense of the House that the President should withhold support from any proposed exemption for India for the NSG guidelines that was not fully consistent with the Hyde Act and that does not incorporate a number of key provisions. These provisions included immediate termination of all nuclear commerce by the NSG member-States if India detonates a nuclear device or if the IAEA determines that India has violated its safeguard commitments: a requirement that the safeguards agreement concluded between India and the IAEA provides for safeguards in perpetuity for all nuclear materials, equipment and technology designated as “civil” in accordance with IAEA standards, principles and practices; a prohibition on the transfer of enrichment, reprocessing and heavy water production technology by any NSG member-States in India; and a stipulation that the NSG supplier-States may not give consent to India reprocessing nuclear fuel except in a facility that is under permanent and unconditional.



NSG deal on denial of sensitive technology, furore over Bush’s letter

Meanwhile, a report in the WASHINGTON POST that under a deal within the deal the NSG countries have reached a secret understanding not to supply sensitive technology to India and President Bush’s letter to US Congressmen that fuel supply assurances to India are not legally binding, have sparked a major controversy, with India asserting that Indo-US nuclear cooperation would be carried out only on the basis of the respective rights of the two sides as contained in the 123 Agreement.



The WASHINGTON POST said on Sept. 12 that prior to vote on the NSG waiver, members of the NSG privately agreed not to sell “sensitive technologies to India, a decision that convinced opponents of the civil nuclear deal to eventually back the initiative. The Post noted, “The agreement undercuts one of the Indian Government’s key rationales for seeking a civilian nuclear deal with the US – that it would open the door for full civil nuclear cooperation with the rest of the world”.



The paper, citing sources familiar with the discussions, said, the NSG’s previously undisclosed understanding helped persuade several skeptical member-States to support a waiver authorizing nuclear trade with India. “In the discussions about how to handle enrichment and reprocessing, it was made clear that nobody had any plans to transfer such technologies to India in the foreseeable future”, said a senior US official, on condition of anonymity.



The NSG is also reportedly “nearing consensus” on a total ban on sensitive sales to countries such as India that have not signed the Nuclear Non-Proliferation Treaty. “The move would put such trade even further out of New Delhi’s reach”, it said.



On the other hand in a message to Congress, while sending them the 123 Agreement to study before its approval, President Bush said, US commitments on “a reliable supply of nuclear fuel” are merely “political commitments” and not “legally binding commitments.” This means an uninterrupted fuel supply would depend on individual Presidents. The Bush letter said, “Sensitive nuclear technology, heavy-water production technology and production facilities, sensitive nuclear facilities and major critical components of such facilities may not be transferred under the Agreement unless the Agreement is amended.” He said, “The agreement permits the enrichment of uranium subject to up to 20 per cent in the isotope 235. It permits reprocessing and other alterations in form or content of nuclear material subject to it. However, in the case of such activities in India, these rights will not come into effect until India establishes a new national reprocessing facility dedicated to reprocessing under IAEA safeguards and both parties agree on arrangements and procedures under which the processing or other alterations in form or content will take place”, the communication noted.



Foreign Office officials in New Delhi believe that Bush’s observation in the covering letter is at variance with their understanding during the negotiations in the run-up to the separation plan, 123 Agreement, safeguards agreement with the IAEA and the exemption by the NSG. They point out that India on its part, committed itself to binding agreements like the safeguards. They also dispute the American understanding that the 123 Agreement should be treated as any other US pact with other countries because it is only the Indian pact which contains references to fuel supply assurances.



President Bush’s contention in the letter that fuel supply assurances to India are not binding has sparked a major controversy with India asserting that the Indo-US nuclear cooperation would be carried out only on the basis of the respective rights of the two sides as contained in the 123 Agreement. Pointing out that the rights and obligations of both countries were clearly spelt out in the 123 Agreement, India maintained that once this inter-Governmental pact entered into force, it would become a legal document in accordance with the well-recognised principles of international law and the Law of Treaties. This implied that New Delhi believed that the political commitments for uninterrupted supply of fuel would then get translated into a legally binding commitment.



With both the BJP and the Left parties getting fresh ammunition to mount attacks on the UPA regime over the controversial deal, an External Affairs Ministry spokesman said [Sept. 12], the Government would ensure that India’s rights were fully protected while implementing the civilian nuclear energy cooperation agreement.



However, the Opposition was unsparing in its criticism of the Manmohan Singh Government over President Bush’s determination. Charging the Government with a sell-out, senior BJP leader Jaswant Singh said the Government must debate the issue in Parliament. D. Raja of the CPI said the determination by the US President vindicated the Left’s stand that India has not got a clean and unconditional waiver from the NSG as was being projected by the Government. The CPM in a statement said, the Presidential determination sent to the US Congress, contradicted the claims made by the UPA Government that it has got guarantees for permanent fuel supplies and on perpetual safeguards. “The Bush determination once more proves that the Indian Government has consistently misled the people of this country”, the statement added. The leaders of the Left parties, the Bahujan Samaj Party, the Telugu Desam Party and the Janata Dal [Secular] called on President Pratibha Patil on Sept. 9 and sought her intervention to hold the monsoon session of Parliament immediately to prevent, what they called, subversion of constitutional scheme. The Government has decided to call a session from October 17.



Joining in, the US Ambassador to India, David Mulford has said the contents in the Bush note, especially on fuel supply guarantees, were not different from the provisions of the 123 Agreement or the March 2006 separation plan that was agreed upon by President Bush and Prime Minister Manmohan Singh.



Setting at rest another controversy, he said, India was free to conduct nuclear tests. Mulford told a TV channel on Sept. 10 that India has the sovereign right to conduct nuclear tests. He denied India has given a commitment not to conduct tests. His statement, however, carries no significance because the Hyde Act clearly says there will be an immediate end to bilateral nuclear cooperation if India tests a nuclear weapon. The State Department’s own interpretation is that even fuel supply guarantees would cease to exist if India were to test a nuclear weapon.



No other deals till US ratifies 123 pact – India’s assurance to Washington

The US Government is in a fix because while the NSG waiver can allow India to immediately enter into negotiations with nuclear technology supplier countries such as France and Russia, the US companies will have to wait until the 123 Agreement is cleared by the US Congress which can take time. So, US Secretary of State, Condoleezza Rice is reported to have urged External Affairs Minister, Pranab Mukherjee not to put the US into disadvantage because of this lacunae. In an apparent attempt to address US concerns, Mukherjee has said it would wait for ratification of the 123 Agreement by the US Congress before initiating nuclear trade with other countries. Talking to newsmen on the sidelines of his meeting with the visiting Chinese Foreign Minister Yang Jiechi on Sept. 9, he said that India would wait for the US Congress to ratify before going ahead with nuclear trade. To quote Mukherjee, “The approval of the Board of Governors of IAEA for the India-specific safeguards agreement and the NSG waiver are the passports to enter into international nuclear trade. But, as far as the procedure is concerned, we shall wait for the ratification of the 123 agreement between India and the US”.



But, apparently to put pressure on Washington to hurry up with the ratification of the 123 Agreement, the Foreign Office spokesman said, India would not wait for the US to finish its legislative process for entering into negotiations and signing bilateral agreements with France and Russia. The Ministry announced on Sept. 11 that preliminary negotiations on buying nuclear technologies and facilities have also started with companies from the US.



According to sources, the National Power Corporation of India Ltd. [NPCIL] has shortlisted Westinghouse [AP 2000 reactor, GE-Hitachi [ABWR reactors], Areva [1000 MW EPRs] and Russian atomic energy agency Rosatom VVER 1000 reactors] for the first lot of reactors to be bought by India after the nuclear deal completes all its stages.



Business potential flowing from the NSG waiver

The NSG waiver is a truly global opportunity as India opens its doors for nuclear trade. It will generate worldwide business worth $40 billion and allow Indian companies to supply components to foreign nuclear plant makers, offer power generation opportunities to Indian firms and increase the nuclear level in the country to 52,000 MW by 2020 from the present 4120 MW, according to nuclear experts. Disclosing that the plan to import reactors to enhance India’s nuclear power programme formed a part of the 11th Five Year Plan between 2007 and 2012, the Managing Director of Nuclear Power Corporation [NPC], S.K. Jain, said, “We will begin the modalities of financing the acquisition now that we have the NSG clearance”.



India Inc is optimistic that the NSG waiver and India’s entry into the elite nuclear club will have significantly economic spin-off. It is hopeful that this development would put the country’s high technology trade and business into the high growth trajectory. According to an industry body, Confederation of Indian Industry, in the mid and long terms, India has an opportunity to become an export hub for the supply of spares and components for the nuclear power plants besides receiving technology and nuclear reactors for the nuclear power plan of the country. The Assocham has said about 40 companies, including Videocon and Sajjan Jindal Group, were in talks with companies abroad to set up nuclear power plants, envisaging an investment of about Rs. 200,000 crores. The Assocham has urged Prime Minister Manmohan Singh to amend the legislations regarding nuclear power to facilitate the entry of the private sector into the generation of nuclear power, Venugopal Dhoot, former President of Assocham, said. Responding to the demand, Science and Technology Minister Kapil Sibal announced the Government’s intention to amend the Atomic Energy Act of 1962, that could throw open the atomic energy sector to private investment in equipment manufacture, electricity production and overall nuclear trade and commerce. At present, the entire gamut of activities connected with nuclear energy, beginning from uranium to thorium mining, is the Government’s monopoly and only a Government company[in which the Centre has 51% or more paid up share] can set up nuclear plants and generate power.



The CII said the NSG clearance has now directly opened up business opportunities worth Rs. 1,20,000 crore in the next 15 years. This would add around 18-20 nuclear reactors at a cost of Rs. 5000 to Rs. 6000 crore each. The nuclear deal will also enable addition of new capacity and help fulfil the target of adding 40,000 MW of nuclear power by 2020 and 63,000 MW by 2030, it said in a statement.



Already, the waiver and the prospects of a possible Indo-US nuclear deal has led global nuclear majors such as General Electric, Westinghouse, Areva, Rosatom to re-launch talks for manufacturing and supply of nuclear power equipment while also initiating parallel negotiations with the State-owned Nuclear Power Corporation of India for the supply of nuclear fuel and technology for existing power plants and upcoming projects. Global uranium suppliers led by Australian, Kazakh and Canadian firms are also eyeing fuel supply contracts with NPCIL, said sources. Larsen and Toubro [L&T], India’s largest engineering company, is ready for its forays into building nuclear reactors. The pact with the US is likely to generate orders of more than $10 billion for companies such as L&T and BHEL.



According to S.K. Jain, Managing Director of NPCIL, apart from countries like the US, France and Russia, more vendors will now be knocking at India’s atomic door for a share in Rs. 2.4 lakh crore project. In fact, the French nuclear major, Areva has already set up an office in Mumbai waiting for formal business discussions.