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Vasily Shikin

Ph.D. in History, RIAC Expert

A breakthrough in negotiations between New Delhi and Washington on nuclear energy cooperation is an undeniable diplomatic success of Indian Prime Minister Narendra Modi. The details of the agreement that was reached are virtually unknown. However, it is already clear that the agreement could have a significant impact not only on the development of relations between India and its neighbors, but on the maintenance of an international nonproliferation regime as well.

A breakthrough in negotiations between New Delhi and Washington on nuclear energy cooperation is an undeniable diplomatic success of Indian Prime Minister Narendra Modi. The details of the agreement that was reached are virtually unknown. However, it is already clear that the agreement could have a significant impact not only on the development of relations between India and its neighbors, but on the maintenance of an international nonproliferation regime as well.

The sixty-sixth Republic Day of India was truly unique. Most Indians will remember the colorful traditional military parade and the presence among the high-ranking guests of Barack Obama – the first president of the United States to hold this honor. For Narendra Modi, this first festivity during his premiership will be associated primarily with the major diplomatic victory. It took the new Indian leader eight months in office to do something that his predecessors had failed to achieve in six years, namely to break the deadlock in talks between New Delhi and Washington on nuclear energy cooperation.

India's nuclear isolation

India's nuclear ambitions have a long history: the country began to realize its nuclear program immediately after gaining independence. Delhi refused to sign the Treaty on the Nonproliferation of Nuclear Weapons (NPT, 1968), considering it discriminatory and built its own nuclear arsenal. Since then, Indian politicians in their public speeches have not called the international nonproliferation regime anything other than “nuclear apartheid”. The Jimmy Carter administration in the U.S. (1977-1981) imposed a ban on the supply of nuclear materials and equipment to India. Later the ban was joined by leading exporting countries, which formed the Nuclear Suppliers Group (NSG), including Canada, Australia, France and China.

Narendra Modi’s government had to unfreeze the contracts concluded with foreign companies in the US and France before the passing of the Civil Liability for Nuclear Damage Act and to come to an agreement with other countries that export nuclear materials and technologies and which still refused to cooperate with India.


wikipedia.org
Kudankulam Nuclear Power Plant

Ironically, the problem of the nuclear isolation of India that Narendra Modi addressed with his usual zeal was handed down by his predecessor Atal Bihari Vajpayee (1998-2004), who brought the Bharatiya Janata Party (BJP) to power for the first time. After a series of nuclear tests in May 1998, India faced international sanctions that banned any supply of nuclear materials and equipment.

India's nuclear blockade lasted for about thirty years and was broken by the NSG’s decision of September 6, 2008 to suspend the ban on exports to that country. This was made possible due to the nuclear deal concluded between Washington and New Delhi in July 2005. Then US President George W. Bush and then Indian Prime Minister Dr. Manmohan Singh signed an agreement, under which India agreed to separate its civil and military nuclear facilities and to place its civil nuclear facilities under International Atomic Energy Agency (IAEA) safeguards. The document was at variance with the international practice of applying comprehensive safeguards and enriched the legal arsenal of the IAEA with the term of “India-specific safeguards”. In return for these concessions, India gained free access to nuclear technology from the US and other countries which export nuclear materials and technologies.

However, in 2010, the Indian parliament passed the Civil Liability for Nuclear Damage Act that actually put an end to the efforts of Manmohan Singh’s government to gain access to foreign nuclear technology. The Act provides, inter alia, that in case of a nuclear accident it is the supplier of the equipment who is at fault. The new legislation has forced Westinghouse, GE Hitachi and Areva, each of which was awarded contracts after 2008 to build six units in India to suspend the implementation of their projects.

Narendra Modi’s atomic diplomacy

However, neither the warm relations between Narendra Modi and Shinzo Abe, nor the common vision of foreign threats nor the interest of Japanese companies faced with falling demand for their equipment on the domestic market after the Fukushima nuclear power plant disaster, forced Japan to conclude such an agreement with a country that had not adhered to the NPT.

At the beginning of his premiership Narendra Modi promised “to enable every home in India to run at least one light bulb”. Given that 400 million Indians had no access to electricity, the promise was more than ambitious. To achieve this goal the Department of Atomic Energy of India planned to increase nuclear power capacity to 17,080 Mw from the then level of 5,780 Mw by 2022 First, Narendra Modi’s government had to unfreeze the contracts concluded with foreign companies in the US and France before the passing of the Civil Liability for Nuclear Damage Act and, second, to come to an agreement with other countries that export nuclear materials and technologies and which still refused to cooperate with India (Australia and Japan among them).

The negotiation process between New Delhi and Tokyo, initiated back in 2010, was complicated by the intransigent attitude of Japan towards compliance with the non-proliferation regime, as it had experienced first-hand the destructive capability of nuclear weapons. It was expected that Narendra Modi would give a new impetus to the negotiations: the media often compared the Indian leader with Shinzo Abe, noting both politicians’ leaning towards nationalism, concentration on economic issues and strong rhetoric against Beijing.

Signing the agreement on nuclear energy cooperation was timed to coincide with the first visit of the newly elected Prime Minister of India to Japan, which was scheduled for August 30 - September 3, 2014. This signing inspired hope that during the visit to the United States scheduled for October a package of contracts would be concluded with Westinghouse and GE Hitachi, as Japanese investors owned large stakes in these companies [1]. However, neither the warm relations between Narendra Modi and Shinzo Abe, nor the common vision of foreign threats facing India and Japan, nor the interest of Japanese companies faced with falling demand for their equipment on the domestic market after the Fukushima nuclear power plant disaster, forced Japan to conclude such an agreement with a country that had not adhered to the NPT.

REUTERS
Russian President Vladimir Putin and Indian Prime
Minister Narendra Modi after their interaction in
New Delhi. December 11, 2014

The Indian Prime Minister had an opportunity to make up for this flop in Tokyo immediately after returning home. On September 5, 2014, during the visit of Australian Prime Minister Tony Abbott in New Delhi a nuclear cooperation agreement was signed between India and Australia. Since 1977, cooperation between the two countries in this area had been blocked by the Australian embargo on nuclear materials to countries that were not signatories to the nuclear non-proliferation treaty [2]. The embargo against India was lifted in 2013 on the initiative of then Prime Minister of Australia Julia Gillard (2010-2013). However, Australia could not start supplying uranium to India without a nuclear cooperation agreement, negotiations for which were launched in March 2014. The delegations of the two countries managed to find a compromise that made signing this document possible: the agreement had a clause under which Delhi pledged to use the Australian uranium solely on nuclear power plants under the supervision of the IAEA experts.

A search for a compromise with the US

During a meeting in Washington on September 30, 2014, Narendra Modi and Barack Obama decided to establish a bilateral contact group. Its aim was to

The United States was the next destination for Narendra Modi’s international “nuclear” tour. There were two fundamental differences that hampered the reaching of a cooperation agreement between the two countries (2005). To eliminate the risks to US equipment suppliers, Washington insisted on amendments to the Indian Civil Liability for Nuclear Damage Act. Narendra Modi’s government could not comply, as the Act enjoyed broad support among the Indian public, and its amendment in accordance with the US demands would have had a negative impact on the rating of the Indian leader. Apart from that, the American side also insisted on its right to track the movement of all nuclear materials and equipment delivered to India. Delhi argued that there was no need to do so, given that the tracking was already carried out by the IAEA experts.

During a meeting in Washington on September 30, 2014, Narendra Modi and Barack Obama decided to establish a bilateral contact group. Its aim was to develop conditions under which American companies would be able to start the construction of nuclear power plants in India. A “breakthrough understanding” was announced at the next meeting of the two leaders on January 25, 2015 in Delhi, where the US president arrived to celebrate the Republic Day of India. Details of the agreement were not disclosed. However, we know that the United States accepted the offer of India to set up an insurance fund that would partially cover the expenses of American companies in the event of an emergency, and rescinded a claim to track the movement of nuclear materials around the country.

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International response

Islamabad reacted to the US-India agreement painfully, seeing in it a threat to its security. The nuclear ambitions of India’s northern neighbor, which also is developing its nuclear weapons program and is not a party to the NPT have not yet received wide international recognition. However, it is known that Pakistan’s Prime Minister Nawaz Sharif considers nuclear power as the key to solving the problem of energy shortages faced by his country. In 2013, it was announced that the preparatory work for the construction of a new power unit at the Karachi NPP site had been started.

In contrast to India, Pakistan does not have its own reactor technologies, so the project is based on Chinese technologies. Critics of the Sino-Pakistani cooperation in the nuclear field voice concern that Beijing is contravening the guidelines of the NSG, which it joined in 2004. Given the long-standing rivalry between Pakistan and India and the complicated relationship of the latter with China, it is not surprising that after the diplomatic success of Narendra Modi China, which had carefully concealed the scope of its nuclear cooperation with Pakistan, officially announced its participation in building six nuclear projects in South Asian countries.

In contrast to India, Pakistan does not have its own reactor technologies, so the project is based on Chinese technologies.

The special relationship that Delhi has built with the IAEA and exporting countries excites envy among other countries intending to develop their own nuclear power. For example, cooperation between the West and India has been met with raised eyebrows in Tehran, which has been subjected to international sanctions, despite its repeated statements about the absence of any intent to develop a nuclear weapons program. At the same time, New Delhi, which does not conceal its nuclear arsenals, has not only escaped punishment, but has been actually encouraged by gaining access to the latest technologies in this field.

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It is obvious that it is the foreign policy of the country, which seeks nuclear technology that determines whether the international non-proliferation regime is no longer regarded as violated, and a “specific” relationship is established. This may fuel the nuclear ambitions of threshold states that have allied relations with Washington (Japan, South Korea, etc.) or territorial disputes with nuclear China, as well as of the countries that are just beginning to develop their own nuclear program and aspire to regional leadership (Saudi Arabia).

Moscow’s reaction to the deal between India and the US was also not long in coming: the Russian embassy in New Delhi issued a press release in which it highlighted the advantages of Russian nuclear technology over the American one. Despite the apparent concern of Russia, the Indian-American agreements are unlikely to seriously hamper Russian-Indian cooperation. Moscow has proved its worth as a reliable partner and has not scaled down cooperation with New Delhi in the nuclear sector due to the imposition of international sanctions against India or the new Indian legislation. In 2013, Russian specialists launched the first unit of the Kudankulam nuclear power plant and are currently carrying out the start-up and commission work on the second unit. Therefore, the resumption of cooperation between India and the West in the nuclear industry hardly threatens the current stock of orders that Rosatom has in that country. It should be noted that after Vladimir Putin’s visit to New Delhi in December 2014, Rosatom increased its business portfolio with contracts for the construction of two additional power units at the Kudankulam NPP site and a preliminary agreement to build twelve power units over the next twenty years.

This may fuel the nuclear ambitions of threshold states that have allied relations with Washington or territorial disputes with nuclear China, as well as of the countries that are just beginning to develop their own nuclear program and aspire to regional leadership.

The 10 GW of new nuclear power capacity by 2022 that the Prime Minister promised India seemed an elusive goal last year, but now looks real enough, due to the new contracts with Russia and progress in the negotiations with the United States. Given that Barack Obama and Narendra Modi have achieved a fundamental understanding on the political level at their meeting, today there are basically no differences of principle that could make US companies abandon the multibillion-dollar profits which the signed contracts promise them. In addition, the position of Narendra Modi’s supporters in parliament is too strong to let the opposition block the implementation of the agreements reached.

However, the absence of an agreement with Japan on cooperation in the field of peaceful nuclear power prevents the beginning of realizing these projects, as some components for nuclear power plants are produced in Japan and cannot be used on construction sites in India. But the management of Westinghouse and GE Hitachi has already found out a way out and have started looking for contractors in India who could provide similar components. Thus, given the political will of Delhi and the commercial interest of foreign suppliers of nuclear equipment, construction may begin as early as 2016.

There is little doubt that an agreement with the United States is Narendra Modi’s major diplomatic victory as Prime Minister. Delhi has a lot of tiring work to do yet, including among other things finalizing an agreement with the American companies and finding a compromise with Tokyo. But we can already state with certainty that no other country that violates the nonproliferation regime enjoys such privileges as India does. Of course, the “nuclear apartheid,” which India hates so much, is still there, although now it can be rather called “formal discrimination” at the most.

1. Toshiba Group holds 87 per cent of Westinghouse shares. General Electric does not develop nuclear business on its own, but does it in the international alliance with Hitachi.

2. Australia has 31 per cent of the world explored reserve of uranium, which can play an important role in fueling nuclear power plants planned for construction in India.

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