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India-US agree on new NSG draft – circulated among members

	September 01, 2008

After 24 hours of negotiations, India and the United States agreed on Aug 30 on the text of a revised American proposal seeking a waiver for India from the export guidelines of the Nuclear Suppliers Group. It has been handed over to Germany – NSG chair for 2008 – and has already been made available to the club’s 45 countries. The contents of the text of the revised proposal have not been disclosed.



The NSG under the chairmanship of Germany will be holding a meeting of the member countries on Sept. 1 to take up the new draft. Although the NSG tentatively set Sept. 4-5 for its next meeting when it last met in Vienna on Aug. 21-22, a handful of States are asking for more time to study the new proposals. However, with the Bush Administration anxious to complete the NSG stage of the nuclear deal so that the “123 Agreement” with India may be handed over to Congress by Sept 8, Berlin is expected to announce the immediate convening of the cartel’s extraordinary plenary on Sept. 1.



In keeping with the sensitivities of the NSG members upset at the premature leak of the details of the draft last time around, India and the US have made sure that it is not leaked this time. However, sources said, the draft was within the “red lines” given by India. The draft steers clear of mentioning the “testing” word and any reference to the CTBT, something that India has strongly resisted despite a handful of NSG countries pushing for it. Similarly, there is no talk of a review mechanism though India is open to holding a regular dialogue on non-proliferation. Also, sources said there was no explicit bar on trading in enrichment and reprocessing [ENR] technology after India argued that the current NSG guidelines do not have this provision.



An interview by National Security Advisor M.K. Narayanan to Karan Thapar for CNN-IBN on August 29 further provides a glimpse of India’s stand on the draft. Narayanan said ways would be found around the demand for an explicit reference to nuclear testing as a condition for termination of cooperation by the NSG. “We have always made this point that testing is a word that we find difficult to adjust with. So, we will find ways around it,” he said. Narayanan said “if any country does not wish to give us enrichment and reprocessing technologies and still wishes to have nuclear commerce, we’ll draw up our guidelines according to that. What we don’t want is each country’s individual predilections forming a huge package of items in the NSG exemptions.” As for the demand for the NSG to make a periodic review of its India waiver, the NSA said this was “uncalled for.” Narayanan indicated that India had no objection to the NSG Chair making a statement containing “prescriptive suggestions so long as it did not affect the waiver. “If the Chairman is making a statement which reflects, to some extent, some of the concerns of NSG states, it may be but as long as it does not inhibit us from what we believe is a clean and unconditional exemption,” he said.



At the earlier NSG meeting on August 21-22 at least 15 countries including New Zealand, Austria, Norway, the Netherlands and Switzerland had sought changes in the draft and proposed as many as 50 amendments linking the waiver to non-proliferation. High on their list of amendments were clauses that would deny India enrichment and reprocessing rights and automatically nuclear trade if India were to carry out a nuclear test. India’s Atomic Energy Commission Chairman Anil Kakodkar, however, maintained that the waiver “has to be within the parameters of July 18, 2005 understanding between India and the US.” He told newsmen, “We have done every bit of what we were supposed to do. So we cannot accept any more conditionalities. Kakodkar said the NSG exemption should be clean and there should be no additional condition. “They may want to push, but India cannot be pushed. Civil nuclear cooperation is important but that does not mean at any cost”. His assertion came close on the heels of External Affairs Minister Pranab Mukherjee’s declaration that India would not accept “prescriptive conditions. Speaking on the sidelines of the BIMSTEC Foreign Ministers meeting in New Delhi on Friday, August 29, he said India “is interested in a clean waiver without conditions.”



Before the draft was finalized, there was a hectic political activity in New Delhi. Prime Minister Manmohan Singh held talks with Congress President Sonia Gandhi, External Affairs Minister Pranab Mukherjee and senior party leader Ahmad Patel on the nuclear issue ahead of the NSG meeting. Top aides of the Prime Minister were engaged in video conferencing with Foreign Secretary Shiv Shankar Menon who is in the US and discussed the amendments in the draft with State Department officials. The revised version of the draft handed over to India on Aug. 26 was also studied by a team of Indian officials for two days. The meeting chaired by the National Security Advisor was also attended by Anil Kakodkar and other top officials from the Department of Atomic Energy, the Prime Minister’s Office and the External Affairs ministry as well as members who have been part of India’s negotiating team with the US since 2005.



The meeting finalized India’s position on the objections raised by some hardline members of the NSG in the previous draft text at the last meeting. Menon discussed the new Indian position with the US officials in Washington before the two sides could agree on a common draft which would now be discussed at the NSG meeting.



The last two-day meeting of the NSG in Vienna ended on Aug. 22 without its members coming to an agreement on lifting the existing ban that can allow nuclear commerce with India. Though most members were in favour of making the special exemption for India, some in the NSG also insisted that provisions be brought in to halt all commerce with New Delhi if it conducted any further nuclear test. Talking to newsmen later, Foreign Secretary Menon claimed that there has been a narrowing down of differences between the various countries, but admitted that concerns of some countries remained. Stating that it would be quite remarkable that 45 different countries could decide to have a one point of view over any issue, Menon pointed out that the concerns stemmed not so much from India and its track record on non proliferation but from the stand of many of these countries on the nuclear issue. For some countries like Austria and New Zealand which are going to face elections soon, the strong anti-nuclear stand among sections of their voters played a crucial role in erasing these concerns at the NSG meeting.



The Indian team in Vienna, however, had made it clear that New Delhi could not accept anything it had not committed itself to in the July 2005 joint statement by Prime Minister Manmohan Singh and US President George W. Bush. The conditionalities included the existing nuclear testing moratorium, no export of enrichment and reprocessing (ENR) technology, and conforming to non-proliferation agreements like the IAEA Additional Protocol and Missile Technology Control Regime. The conditionality India was most concerned about – the ban on ENR technology – was scuppered by two arguments. One, the NSG has never included such a clause in its guidelines. Two, the US had left a door open for such technology to be passed to India in the Hyde Act. It would be absurd for a group of nuclear nothings to be able to block this access. On testing, India argued that the existing moratorium was already imbedded in nuclear deal documents. It was impossible to go back and change these. When it came to calls for periodic monitoring of India’s nuclear facilities, the response was, “who will provide financial compensation for the cost of shutting down reactors?”



The visiting US Assistant Secretary of State Richard Boucher held a meeting with the Prime Minister’s Special Envoy, Shyam Saran, and other officials in the PMO in New Delhi on Aug. 25 to discuss the proposed amendment in the draft that would be acceptable to India as well as other countries about the waiver without conditions. After a meeting with External Affairs Ministry officials, Boucher refused to take questions from the media, But last week in Mumbai he said there would have to be changes in the draft that comes up for discussion in Vienna.





In a bid to dispel the impression that Washington was not doing enough to fulfil its commitment to get a clean NSG waiver for India, US Ambassador to New Delhi David Mulford asserted that the Bush Administration would stand “shoulder to shoulder with New Delhi” in rapidly completing the remaining steps to conclude the nuclear deal. However, talking to newsmen on Aug. 25 he used the word “clean” and not unconditional for the waiver something India has been insisting upon clearly there are gaps in the perceptions between India and the US as they try to take the deal through the last mile.



Apparently rattled by the strong position taken by the countries like Austria, New Zealand, Ireland and Switzerland against a clean waiver to India, the US envoy hinted at the possibility of President Bush personally taking up the issue with leaders of these nations before the NSG is re-convened. US Secretary of State Condoleezza Rice when asked whether developments in Georgia will take the attention away from reworking on the nuclear deal with India, she said “Our principal focus right now has been on the deal.”



It is notable that the US, which has been seeking support for an India-specific waiver with the NSG member countries, has made it clear that New Delhi can expect clean but not unconditional waiver. The US Ambassador to India is on record as saying that India should not talk about “an unconditional waiver” as it is provocative.



The conditions that are sought to be introduced in the NSG waiver by the opponents include “prescriptive” amendments, which seek that India eventually signs the Non-Proliferation Treaty and the Comprehensive Test Ban Treaty. Other amendments include the “post-conditions” including periodic review and a whiff of America’s Hyde Act – a list of actions which could result in the immediate and automatic termination of nuclear supplies to India. There is also an attempt to limit the scope of co-operation to certain aspects of the nuclear fuel cycle and exclude enrichment and reprocessing (ENR). That there would be changes in the draft waiver was evident as early as day two of the NSG meeting in Vienna. The fact that India’s Foreign Secretary is now in Washington negotiating these “changes” could serve as an indication that the Indian Government is ready to consider the suggested amendments. The Indian Government now hopes that countries like New Zealand, Ireland, Austria, Finland, Denmark, Switzerland, Sweden and the Netherlands will not press for the substantive amendments that they demanded. It also hopes that the US will be able to lean on the nations to allow for a consensus on the waiver for India. New Delhi also is counting on the benefit that a waiver provides to countries like Russia and France to create a pressure on the nay-saying members. After all, there is no reason why Paris or Moscow would agree to the introduction of a termination clause on the lines of the Hyde Act, if that means that they get an opportunity to corner the Indian nuclear market. India hopes that enlightened self-interest and the combined bargaining ability of France and Russia would ensure that a demand for a termination clause is dropped. However, in the past both Moscow and Paris have shown themselves unwillingly to take the lead, leaving it to Washington to undertake the bargaining.



Austria and New Zealand have made statements now softening their stand. Earlier in their opening statement to the closed door meeting of the NSG on August 21, the six countries, including New Zealand and Austria, which were part of the Group of Six had warned that the reference to UN resolutions is clearly to UNSCFR 1172, passed after the nuclear tests of 1998, which called on India to sign the Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty. And the “domestic legislation” the six have in mind is the Hyde Act, passed by the US Congress in December 2006, which sought to move the goalposts for nuclear cooperation envisaged by the July 2005 agreement in a manner unfavourable to India.



There are three main conditions that have become the “core” - a “testing” clause bar on transfer of enrichment and reprocessing technology and a periodic review of India’s compliance. The easiest to resolve will be the “review” demand – India opposes something that is intrusive or discriminatory, so the way out appears to be something like this. India would engage in a kind of “chair dialogue” or a periodic consultation with the NSG that would not be intrusive. Instead, it would be a mechanism that could enhance India’s relations with the global nuclear body. On the issue of “testing”, or whether NSG will cease cooperation if India tests another nuclear weapon, the proposal gaining currency is a replication of the 123 Agreement- that in such an event there would be a set of “consultations” between the NSG members where the decision on a future course of action would be taken in NSG tradition, by consensus. The problem of compromise pertains to the transfer of enrichment and reprocessing technology (ENR) to India. New Delhi is adamant that this should not be barred to India. But many countries are insisting on barring this to India.



The infamous Hyde Act actually allows transfer of ENR technology to India under certain conditions – in a multinational facility, under a bilateral agreement or if the US President certifies that the enriched fuel would only be used for civilian purposes. The 123 agreement opened the door for separate agreements on reprocessing, and the IAEA also left the door open for a separate agreement on enrichment. The NSG guidelines themselves do not talk about ENR transfers. Over the past few years, the NSG countries have been involved in a heated debate about whether to include ENR technology in the guidelines. But there has been no decision yet. In fact, since the NSG has been established, said sources, there has been a tradition of transferring ENR technology only to countries that already have it. But there is a huge resistance to giving it to India, and one of the unstated reasons, said an Indian official, could be “to extend India’s external vulnerabilities”. India is equally adamant on this. The compromise that has been offered to India is that the NSG would defer decision on India’s demand until it decides on its own guidelines. Sources said New Delhi would reject this outright, because accepting any bar on ENR would mean the choking off of India’s nuclear industry – it means India would import reactors but cannot enrich fuel to feed it or reprocess to clean up. NSG officials said they were wading through some 50 amendments that have been tabled, and none of them have been removed yet. This means the opposition has not dried up yet, they said. Some of the amendments are clearly for domestic audiences, and certainly there is no question of putting the NPT and CTBT demands on the table, they said. However, the US is already working on the next step of the nuclear deal.