Brief story of the Indo-U.S. Nuclear Deal

(Note: several readers may be aware of most of the things mentioned in here. This is my humble attempt to explain in simple words, what the deal is about)

In order to battle its energy crisis, when India in 2004 tried to acquire civilian Nuclear technology from France and Russia, the NSG regulations prevented those countries from having any sort of nuclear association with India. Having undergone Nuclear isolation for more than 3 decades, India had two options – reinvent the wheel and spend huge amounts of money and few more decades to indigenously develop advanced Nuclear technology (that too with limited nuclear fuel resources) – OR – get technology and fuel from those countries who already were decades ahead of India in this aspect. India obviously tried to pursue second option – and this time with the USA. The U.S. (mainly Condoleezza Rice, US Secretary of State) saw great sense in having such a deal with India - huge business, strategic alliance, influencing India’s defense Nuclear usage to some extent to bring it under a more regulated non-proliferation regime (given that India had not signed the Non-Proliferation Treaty (NPT) and Comprehensive Test Ban Treaty (CTBT) ) etc.

But in order to do any nuclear trade with India, USA had to:
a) - get a consent from the Nuclear Suppliers Group (NSG) – a 45 member nation organization, of which U.S. is one of the founder members, and
b) - bend its existing internal laws.
The first task was mainly creating a strong case for India at NSG asking it to permit its member nations to allow technology transfer to India. The second was convincing U.S. law makers to accept the 123 agreement that would be signed with India.

On India’s part it was quite an uphill task. It meant two things:
a) – sign the Safeguards Agreement with the International Atomic Energy Agency (IAEA) (this was the easy part) and
b) – get a special waiver from NSG without succumbing to non-proliferation pressures from its member nations and without jeopardizing India’s ability to continue building N-weapons.

To accomplish the first task, India needed to separate its nuclear facilities into Civilian and Defense streams. The Civilian reactors (currently, out of 22 reactors, 14 are civilian) would have to be made open to inspection and regulations by IAEA. Defense reactors and equipment would not be subjected to international regulations or inspection. No technology transfer would happen between civilian and defense sectors and any such issue will have to be first approved by IAEA. That’s not a bad situation for India because India gets the latest technology and equipment to satisfy its civilian energy demands and also gets to indigenously keep on working on improving and increasing its Nuclear arsenal without resorting to testing (unless neighboring countries pose a threat by carrying out their N-tests, in which case we will have to use our diplomatic might to pursuade NSG of carrying out a test in response)

The second task (getting NSG waiver) was probably the biggest hurdle the Indian diplomacy had to face in decades. Opposition from even a few members of the 45-member nation NSG meant demise of the deal. Nations like Sweden, Japan, Switzerland, Austria, Australia, New Zealand were opposing India's efforts from the start. China (which promised support to the deal initially) showed it true colors by trying to scuttle the deal at the last minute. These nations (with the exception of China) have strictly followed the Non-Proliferation paradigm and according to them India, having not signed NPT or CTBT was not an acceptable candidate to be granted such a waiver. Moreover this could set wrong precedent for several other developing nations (like Iran) aspiring to develop nuclear reactors amidst tremendous international opposition. But on the basis of a) its Non-proliferation record, b) pressure tactics from Bush’s administration to these opposing nations, and c) bait of tremendous business opportunity for these nations, the Indian diplomacy succeeded in convincing NSG that India indeed was a trustworthy nuclear power. NSG - the formation of which was in fact partly triggered by India's use of N-technlogy (supposedly aquired for civilian purpose) to build its first N-bomb in 1974, and the rules of which were formatted to keep N-technology out of reach of countries like India - finally granted India the historical waiver. This waiver meant India could practically get technology from any of the willing NSG member nations even if the Indo-U.S. nuclear deal failed to materialize.

The third and final thing needed in order to sign the deal (read 123 agreement) with the U.S. was to get the U.S. congressional nod (meaning changing that country’s law so that it can carry out technology/fuel transfer to India). Bush’s team (led by Sec. of State Condoleezza Rice) led the efforts to convince the naysayers to give up and support the deal. The US House of Representatives passed the deal by overwhelming 298 - 117 votes and the Senate, passed it by 86 – 13 votes.

What does this mean to India:

- End of Nuclear apartheid and decades of isolation. India can now work towards meeting its energy demands.
- Assertion of India as the Sixth Nuclear (civilian) Power (it's already an N-power w.r.t weapons) and an important Nation with substantial geopolitical influence in Asia and the World.
- India gets to maintain rights to reprocess used nuclear fuel.
- More than 40 Billion dollars of US investment in immediate future – this also means opening up of thousands of new jobs in India. According to Imagindia Institute, an Indian lobby group - the economic benefits that will accrue to India's economy by 2030, as a result of nuclear trade could touch $500 billion.
- NSG waivermeans India is free to do similar Nuclear agreements with other NSG nations without having to secure any waivers from them (An N-Deal has already been inked with France)


What does it mean for the U.S. ?

- Billions of dollars of business in N-technology along with business from subsequent defense equipment sale to India
- Creation of thousands of jobs in the US in Nuclear Power related fields as well as indirectly related fields. A recent report in TOI mentioned that around 2,50,000 jobs would be created in the US in next few years of materializing the N-Deal with India
- Closer and stronger strategic and diplomatic ties with India in order to keep growing Chinese influence under check.

All in all, there might be some compromises India have to make (like avoid nuclear tests as much as possible, subjecting civilian reactors to international inspection, etc.), but in the long run, the positives of this deal will outweigh the negatives far more.

Authored by: Mandar Garge