Is Indo-US Nuke Deal Unraveling?
By Shireen M. Mazari

At a time when the United States has come out openly and declared that it sees India as the hegemon in this region and has continued to move on all fronts to strengthen the Indo-US strategic alliance, developments in the nuclear area are undermining one of the cornerstones of this alliance – the Indo-US nuclear deal (a 123 Agreement under US law).

The nuclear deal faces problems on three fronts where developments will certainly impact India adversely in the civil nuclear technology acquisition field and therefore in terms of the 123 Agreement:

1. NSG DECISION. Let us look at the latest Nuclear Suppliers Group (NSG) decision first. For the record, the NSG actually came into existence as a result of the 1974 Indian nuclear test in which India had used plutonium produced with nuclear technology from Canada and heavy water from the US.

According to the official NSG website, India’s 1974 test “demonstrated that peaceful nuclear technology transferred for peaceful purposes could be misused.” Since then the NSG has sought to ensure that sensitive nuclear technology or dual use technology should remain under tight controls and should at best be available only to states that are Party to the Non Proliferation Treaty (NPT). Membership of the NSG is also based on three criteria, one of which is membership of the NPT. The US had sought to alter this and turn it into a mere consideration and not conditionality, in order to accommodate India into the NSG. [In other words, the US tried to weaken NSG membership to let in India by removing the condition of NPT membership.]

The US lobbied intensely during the NSG meeting held in the Netherlands in June 2011. American diplomats went as far as circulating a so-called ‘thought paper’ to help India’s case.

But the results of the NSG meeting shocked India and seemed to show that contrary to what had been reflected in the IAEA BoG over the passage of special safeguards agreement for India, the Nuclear Suppliers Group was not as ready to accept India as effectively as a member of its cartel when it does not fulfill the basic criteria required for this membership.

Despite the loud cries of the Indian press, the NSG still maintains and upholds the condition of NPT membership as a central criterion for NSG membership.

Even more distressing for India was the NSG decision to put further controls on the transfer of enrichment and reprocessing technologies. The Indians were shocked to find that, unlike in 2008 when India was given a crucial waiver by the NSG in terms of dual use and sensitive technology transfers; this time around the NSG not only failed to grant India membership but also tightened up its export controls especially in relation to exports of ENR technologies. While all the new guidelines have not been made public, the central theme seems to be that the transfer of sensitive ENR technologies will exclude nations which are not signatories to the NPT and do not have full-scope safeguards. One needs to recall that India had sought and received a special IAEA safeguards agreement with a number of escape clauses – an unprecedented development in IAEA safeguards.

Even though this NSG decision on tightening controls on ENR technologies does not affect commerce related to nuclear reactors and their fuel supplies – nor affect India’s right to reprocess and recycle spent fuel – it does shut the door on commerce related to enrichment and reprocessing technologies. It is not surprising to find the Indian media and officialdom up in arms against the NSG decision especially since member states asked the US and France to reassess their decision of supporting India. Also, China came out with a strong demand that the same rules should be applied to all potential NSG candidates.

Fearing that the new NSG ENR controls could undermine the earlier 2008 NSG waiver for India, the Indian government immediately responded by declaring that any ‘unilateral’ decision by the NSG cannot supersede the waiver granted to India by the Group in 2008 for carrying out nuclear commerce. In fact, there is now a strange game of doublespeak going on by France, Russia and the US who issued statements reiterating their adherence to nuclear understandings with India while also going along with the NSG decisions—all NSG decisions have to be unanimous. 

In fact, the Obama Administration has been adopting doublespeak on non-proliferation since its inception, revealing a hypocrisy and confusion that seems to mire so many of Obama’s external policies – supporting tighter controls but seeking all manner of waivers for India. Nevertheless some Indian commentators rightly feel that the NSG decision relating to ENR technologies circumscribes the earlier NSG waiver for India. Anil Kakodkar, a former Chairman of India’s Atomic Energy Commission, writing in The Hindu (July 3, 2011), saw the NSG decision on ENR as a reversal of “the logic of the nuclear deal”.

What everyone seems to have forgotten is that the US Congress itself when it accepted the Indo-US nuclear deal placed restrictions on the transfer of ENR technologies (see the Hyde Act for example and the House and Senate Foreign Affairs Committees Reports on the subject).

Also, the L’Aquila statement on Non Proliferation released at the end of the G-8 Summit in Italy in July 2009 called on the NSG to make further progress “on mechanisms to strengthen controls on transfers” of ENR.

So the doublespeak and underhand dealings to accommodate India seem to be continuing even as nonproliferation lobbies within developed countries like the US and nonproliferation-committed states within the NSG seek tighter nuclear technology controls. That is why Pakistan rightly feels that there should simply be a criteria-specific approach and not country-based exemptions.

2. US POLITICAL CONSTRAINTS. But it is not just the NSG that has had a negative impact on the Indo-US desire to bring India into the nuclear mainstream and thereby de facto get it recognition as a nuclear weapon state. Other developments in the US and in India – on the domestic political fronts – may also undermine the 123 Agreement and dent the euphoric US-India partnership.

In the US Congress there is the whole issue of HR 1280. This is a bill introduced in the US Congress that seeks to amend the US Atomic Energy Act of 1954 under which the Indo-US Agreement was made possible (section 123 Agreement). Without this amendment, under current law, such an agreement becomes effective if Congress does not disapprove it within a specified time period. HR 1280 seeks to require congressional approval for such agreements. It also seeks to prohibit the cooperating party from developing enrichment and reprocessing facilities through this partnership–as well as some other critical conditions to be placed on any civil nuclear deal the US may sign with another country.

Ironically, the US Administration through the State Department has put out a brief that if this legislation is passed it will “impede US ability to achieve key non-proliferation goals.”

The logic behind this absurd explanation is simple: that the US regards its 123 Agreements with other partners as a “vehicle for several existing and powerful non-proliferation commitments”. This bizarre logic is explained as follows: “Maximizing the number of 123 Agreements so as to enlarge the number of countries and amount of material covered by these commitments promotes US non-proliferation goals”. 

The absurdity of this explanation is only too clear because the US has already violated its nonproliferation commitments under the NPT by signing a 123 Agreement with India which it would not have been able to do if this amendment had already become law. Now India is under no pressure or compulsion to review its NPT decision. Also India’s proliferation has been further legitimized by a special IAEA safeguards agreement and then the US push –which has so far failed– to get India membership of the NSG.

But first back to the proposed HR 1280 bill. According to the US State Department, this would “impose roughly a dozen significant new constraints on US nuclear exports and on the negotiation and conclusion of 123 Agreements, including provisions that would be required in all new and renewal agreements.” According to the US State Department this would push countries to look towards rival nuclear supplier states as the US would be regarded as an “unreliable trading partner”.

3 – INDIAN POLITICAL CONSTRAINTS. Within India itself, there are growing problems in terms of actualizing the commercial aspects of setting up nuclear power plants by US companies. Interestingly, while the HR 1280 only poses a future threat to US nuclear trade – and it may not even be passed by the US Congress – the US faces another nuclear trade hurdle with India. India has very stringent accident liability laws – a result of the Bhopal Union Carbide tragedy – which could result in nuclear power companies paying out billions in compensation in case of an accident. This is keeping the US private sector (like GE and Westinghouse Electric) away from the $150 billion Indian atomic power market. Hillary Clinton took up this issue with the Indians on her recent visit there where she asked that the accident liability law should be watered down – something not feasible for the Indians politically. The US is pressing India into acceding to the international Convention on Supplementary Compensation for Nuclear Damage (CSC). Meanwhile other suppliers like France and Russia have rushed in to tap India’s lucrative nuclear power market. US officials see this as a major problem – to have the US be left out in the cold because India refused to apply international norms instead of its own extra stringent ones on accident liability so that the US would not be able “to profit from all of the hard work that we’ve put into that,” in Mrs. Clinton’s words – obviously a reference to the groundbreaking 123 Agreement and its follow-ups in the IAEA and elsewhere!


With all these developments going on, even if it is too early to declare that the Indo-US nuclear deal is unraveling, it is certainly the case that actual operationalization of the deal is not proceeding as smoothly as anticipated and in the long run it will be difficult for the US and the supplier cartels to move in the direction being sought by the US and India – that is country-specific exemptions for India.

So in many ways the deal is all set to unravel unless the NSG undermines its own logic – in which case it will be difficult to make only Pakistan the target of punitive measures. But Pakistani diplomacy needs to be stronger and more active on this count. And if the Indian liability laws keep US firms out of the lucrative Indian market we may see US Congress act to undermine the 123 Agreement – especially since HR 1280 is now in Congress.

For Pakistan the time has come to insist on its role as a viable player in civil nuclear trade within the scope of IAEA safeguards. It is time we made it clear to the rest of the world that we cannot be beaten endlessly with the A. Q. Khan issue given how the US and other NPT members have violated their NPT obligations and effectively proliferated to India and given how there is a long list of recorded proliferation by the Indian governments, including the nuclear deal with the former regime of Saddam Hussain in Iraq.

There is no need for Pakistan to be on the defensive as it seeks to push its legitimate nuclear interests forward.

(Edited by This paper is extracted from a press briefing by STR at National Press Club in Islamabad on 23 July 2011)



Editor: Akhtar M. Faruqui
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