India – U.S. Civil Nuclear Agreement: a Breakthrough?

India and the United States announced a breakthrough in civil nuclear negotiations during President Obama’s visit in January. The agreement makes it easier for U.S. firms to invest in India and to supply India with nuclear technology. The deal was signed in 2008, but was delayed because of the U.S. concerns over who would be liable for any nuclear accident, as Indian law allows for suppliers (in this case American firms) to be held responsible in case of an accident. The Indian government has now agreed to address these concerns by reinterpreting domestic law and setting up a $245 million insurance pool in order to shift the financial risk to insurers in the case of an accident. India plans to generate 63,000 MW of nuclear power by 2032 – an almost 14-fold increase on current levels. It has 22 nuclear reactors and plans to build some 40 more in the next two decades. The U.S. plans to build at least eight reactors while Russia is planning to build 20 and France is already building six reactors in the state of Maharashtra, one of India’s most industrialised states.

Image courtesy of scrolleditorial © 2015, some rights reserved.
Image courtesy of scrolleditorial © 2015, some rights reserved.

Previous India-U.S. relations have been tense, in part due to India’s nuclear policy. In 1974, India’s ‘Smiling Buddha’ nuclear test and its refusal to sign the 1978 Non Proliferation Treaty (NPT) went openly against the U.S.’s efforts to promote non-proliferation. Another nuclear test followed in 1998. In both instances, the U.S. imposed sanctions on India restricting its access to technology, fuel supplies, and technical assistance in the nuclear field, and then cut off direct foreign assistance, commercial export credits, and certain technology transfers. These sanctions made it difficult for the India-U.S. relationship to improve because New Delhi saw its nuclear programmes as fundamental for its security, and felt that the U.S. was preventing it from becoming a ‘first class’ global power. Ever since achieving independence, India has greatly valued its autonomy and has refused to succumb to foreign pressure. However, in practice Indian policies have proven to be more in line with the NPT guidelines than those of some of the original signatories that did not comply, such as Iran. Therefore, the sanctions soon began to be seen as an obstacle to further cooperation rather than as a means to bring India under the international nuclear non-proliferation mainstream. Consequently, under the Bush administration, the U.S. changed its approach. On 18 July 2005, the two countries signed the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act. Under the parameters of this initiative, India would commit all of its civilian nuclear facilities to the International Atomic Energy Agency (IAEA) safeguards (U.S. Department of State). This agreement aimed at ‘addressing concerns such as energy security, nuclear safety cooperation, and Indian integration into the global nuclear regime so as to facilitate India’s desire for renewed access to safeguarded nuclear fuel and advanced nuclear reactors.’ It was nonetheless very controversial, as many in the U.S. Congress saw it as a failure of all the years of non-proliferation policy, and it was only approved in 2008. Before then, Congress passed the Hyde Act in 2006, allowing American investment in India’s civil nuclear power industry.

After being predominantly internally focused for the past twenty-five years or so, India has been increasingly ‘opening up’ to the world, perhaps realising that becoming a great power requires engaging with other countries. As India’s foreign policy grows, it seems that the suspicion towards the U.S. has been replaced with the desire to build a strong friendship with the world’s other largest democracy. The U.S. undoubtedly has an interest in allying with New Delhi (anti-terrorism cooperation in a troubled region, counter-balancing China, etc.) and India wants U.S. investment and hopes to enhance its reputation as a growing global power by developing strategic relations with one of the leading global powers. Therefore, bilateral relations between India and the U.S. have improved rapidly: most recently, India’s Prime Minister Modi visited the U.S. only four months before President Obama came to India, and President Obama was even invited to attend India’s 66th Republic Day Parade. Indeed, it has been claimed that it was the ‘personal chemistry’ between President Obama and Prime Minister Modi that enabled the achievement of this recent step forward for the civil nuclear agreement.

It is noteworthy that India’s problems with the provision of electricity (two years ago a power cut left half of the country in the dark) stand in the way of its image of a rising, advanced, power. The Indian government seems eager to tighten the relationship with Washington and it has made considerable concessions in the negotiations. Apart from agreeing to reinterpret its domestic law, the government is also reinterpreting another provision of the law to bar victims of a nuclear accident in India from suing for damages in the U.S. to further protect American investors. These actions are likely to be controversial, given India’s bitter experience over the 1984 gas leak from an American-owned Bhopal city plant that killed almost four thousand people.

Symbolism was definitely an important component of the announcement of the breakthrough. Yet, there is the risk that it might be the only real component too. In fact, there are still obstacles in the way of a full realization of the deal, and some, such as Russia are quite sceptical about the meaningfulness of this announcement. First, American nuclear reactors are more expensive than Indian ones, and it is likely that the pricing will be an issue. Moreover, there is a strong anti-nuclear lobby group in India (the controversial Indo-Russian Kudankulam nuclear plant began producing electricity only in 2013, after years of delays and protests). Finally, one of the U.S. requests is that India accepts additional nuclear-material tracking and accounting arrangements than what IAEA safeguards measures entail. The U.S. requires the establishment of a bilateral safeguards system – ‘an elaborate and expensive arrangement in which India would separately track and account for nuclear materials “by flag” (that is, by each national origin.)’ While India has made some steps to accommodate this request, it is still uncertain whether this will be sufficient. There are many issues still pending and the administrative arrangements are yet to be signed.

Overall, although the breakthrough is still to be realised in practice, symbolism is a very important component of foreign policy and India’s projected power will benefit from this step.

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