Wednesday, September 10, 2008

VIENNA & AFTER

B.RAMAN

The significant decision of the 45-member Nuclear Suppliers' Group (NSG), which met for the second time at Vienna from September 4 to 6,2008, to waive the application to India of the embargo on nuclear trade as laid down in the guidelines adopted by the NSG in 1992 havebeen greeted with unwarranted euphoria on the one side and unbalanced or even motivated criticism on the other.

2. Many media reports and New Delhi-based analysts given to hype have projected the decision as marking the end of 34 years of nuclearisolation for India, which was imposed on it after it carried out its first nuclear test (Pokhran I) in 1974 when Indira Gandhi was the PrimeMinister. After 1974, the US and Canada had imposed bilateral embargoes on India, but there were no universal embargoes. India continuedto interact commercially and scientifically with other countries--- particularly with the then USSR and France---in the nuclear field till 1992. Itwas during this period before 1992 that India signed the agreement with the USSR for the purchase of the Koodankulam I and II nuclearpower stations, which are now under erection in Tamil Nadu by a joint team of Russian and Indian engineers and scientists. To talk of 34years of nuclear isolation is, therefore, incorrect. Bilateral isolation imposed by the US in 1974 did not mean universal isolation by theinternational community till 1992.

3.The Export Guidelines, adopted by the NSG in 1992 under US pressure, made these embargoes universal and came in the way of freshcontracts even with countries such as Russia and France. Despite this, Russia rejected pressure from the Clinton Administration in the USnot to go ahead with the implementation of the contract relating to Koodankulam I and II even though signed before 1992 and has goneahead with its implementation. It was even prepared to sign supplementary contracts under the same pre-1992 agreement for theconstruction of more reactors at Koodankulam. It was the Manmohan Singh Government, which decided not to sign the supplementarycontracts proposed by Russia till the waiver was granted by the NSG lest there be any misunderstanding with the US, which took theinitiative for granting an NSG waiver to India.

4. What the waiver granted on September 6,2008, has done is to restore the status quo ante as it was before 1992. There are no longer anyuniversal embargoes on nuclear trade with India. but the bilateral embargoes imposed by the US after Pokhran I in 1974 still remain. Thesewill be removed only after the so-called 123 Agreement on civil nuclear co-operation signed by India and the US is approved by the USCongress and is formally signed by the two countries. The optimistic expectation is that this will be done before the end of September,2008.When that happens, the status quo ante as it was before 1974 in the nuclear interactions between the US and India will be restored.

5. Though the universal embargoes stand removed, national embargoes or restrictions will remain, wherever they exist unless they srespecifically waived or removed by the country concerned. Thus, Australia has imposed an embargo on the sale of uranium to countries,which have not signed the Nuclear Non-Proliferation Treaty (NPT). This embargo will continue to stand in the way of the sale of uranium toIndia by Australia unless a waiver is granted by the Australian Government. The previous Government of John Howard was prepared to grantsuch a waiver after the NSG granted its waiver to India, but the present Government headed by Prime Minister Kevin Rudd is not.

6. Even in the case of the US, it will not be bilateral nuclear trade with sky being the limit as projected by some analysts . It will be bilateralnuclear trade subject to the limits laid down in the Hyde Act passed by the US Congress. It is an India-specific legislation enacted by the USCongress and , in effect, lays down the conditions, which would govern the nuclear trade with India once the waiver is granted by the NSGand the US Government removes its bilateral embargoes. Thus, the Hyde Act will be very relevant in determining the extent of the nucleartrade between India and the US and the conditions under which it will be carried on. The argument often advanced by the Government ofIndia and its supporters that the Hyde Act is a matter between the US President and the Congress about which India does not have to worryis equally incorrect.

7. Even after the grant of the waiver by the NSG and the coming into force of the 123 agreement between India and the US, interestedcountries will continue to use nuclear co-operation and trade as an instrument of coercive diplomacy to achieve foreign policy objectives innon-nuclear related matters. The US has suspended the implementation of its civil nuclear co-operation agreement with Russia after itstroops intervened recently in Georgia. Similarly, Australia, taking the cue from the US, has suspended the process for the ratification of itsagreement with Moscow for the sale of uranium. Both the countries have made it clear that the suspension will remain in force till theRussian troops are withdrawn from Georgia. India too could be the victim of such coercive pressures in future in case it has seriousdifferences with the US on foreign or other policy matters of interest to the US.

8. Nuclear co-operation with the US could be a double-edged sword. That was the lesson from 1974. It will be unwise to forget that lesson.Arule of prudence will be to avoid over-dependence on the US to meet our nuclear energy and technology requirements and to diversify oursources of procurement. The question is: Will the US allow it or will it demand more than its pound of flesh in return for the leadership roleplayed by it in securing a waiver in favour of India from the NSG India has reasons to be grateful to the US for all that it has done tofacilitate the restoration of the status quo ante, but that feeling of gratitude should not make us tie the future of our nuclear power projectsand industry to the whims and fancies of US policy-makers.

9.A lot of time and energy has been spent on examining whether our agreements with the US and the commitments made by us through theUS in the margins of the parleys at Vienna would affect our future manoeuvrability in matters such as nuclear testing, acquisition ofstrategic fuel reserves for our nuclear power stations and our acquiring the enrichment and reprocessing capabilities. These are importantmatters, but equally, if not more important, is the question whether, in our anxiety to secure the US support for the waiver, we haveinformally bartered away our right to purchase our nuclear equipment and technology from wherever and from whomsoever we want. Isthere an informal commitment made by the Government to the US that all other conditions being equal, preferential treatment will be givento US suppliers? From the evasive remarks coming out of the Government as to whether we intend going ahead with signing thealready-negotiated contracts with Russia, one cannot avoid the suspicion that such a commitment probably exists.

10.Some Russian analysts also seem to suspect that such a commitment exists. Dmitry Yevstafiev of the PIR Centre of Russia has beenquoted by "The Hindu's" Moscow correspondent as saying as follows (September 9): " The waiver would push India closer towards the US. India is clearly drifting towards the US. We (Russia) may have tactical gains, but the strategic outlook for us is dim." What he means is thatwhile Russia may be able to participate in the expansion of the existing projects concluded or initiated before 1992, the prospects of Russia supplying new power stations are not that good.

11.The only way of removing these suspicions from the minds of the public will be for the Government to sign the contracts with Russia foradditional reactors ar Koodankulam as soon as the US Congress approves the 123 Agreement and go ahead with their implementation. Ifthe present Congress does not approve the 123 Agreement due to any reason and the matter gets postponed to the next Congress whichwill come into office only in January next, the Government of India should not hesitate to go ahead with signing the already-negotiatedcontracts with Russia. If it does not and waits indefinitely for a nod from the US, that will only confirm these suspicions.

12. Even though the US Government is not supposed to intervene in private contract negotiations between US companies and their foreigncounterparts, it does try to exercise political pressure to secure a decision in favour of US companies. One has often seen it in the case ofnegotiations of the Boeing with foreign countries for the sale of Boeing aircraft for their airline companies. Similar political pressure onbehalf of US nuclear equipment suppliers will be a fact of life.

13. The post-waiver world of nuclear commerce will be different from the pre-1992 world. We got Koodankulam I and II at concessionalprices from Mikhail Gorbachebv's USSR and Boris Yeltsin's Russia. We will be negotiating our future contracts with Russia of Vladimir Putinand his successors. Putin's Russia has already shown that it could be as money-minded as the US companies. We had the unpleasantexperience of its hard bargaining tactics from the way it sought to impose on us a cost escalation in respect of an old and re-conditionedaircraft carrier being bought for our Navy. It imposed the cost escalation when the implementation of the contract was half-way through. Wehave also been seeing how after completing the two nuclear power stations for Iran, it has avoided their commissioning by delaying thesupply of nuclear fuel on the ground that that there was a delay in Iran meeting its payment obligations. Another reported reason is that Russia is demanding a cost escalation from Iran as it did in respect of the aircraft-carrier for our Navy.

14. While the status quo ante as before 1992 has been restored, we are going to handle our future negotiations in a world different from thepre-1992 world. While we have reasons to be happy with the undoubted diplomatic success achieved by us, we must keep our feet firmly onthe ground, identify the ground realities of today and see how to come to terms with them without damaging our national interests.

15. Vienna has added to our fears and misgivings about China.Can China's word in any matter be trusted? This question bothered us afterthe Sino-Indian war of 1962. During the 1950s, maps started circulating in Communist China showing large parts of India near the border inArunachal Pradesh and Ladakh as Chinese territory. Jawaharlal Nehru repeatedly took this up with Chou En-lai. He assured Nehru that thesewere KMT-era maps and that we should not worry about them. He promised that these maps would be revised after the Communists settleddown in power. They did not revise them. Instead, they invaded India in order to enforce their claims as indicated in these very maps.

16. In the 1980s and the 1990s, the Chinese violated repeatedly all international restrictsions on the sale of nuclear and missile equipmentand technologies and helped Pakistan acquire a nuclear and missile capability. When the US discovered this and took it up with Beijing, ittotally denied helping Pakistan in the military nuclear field and put the blame for the violation of the Missile Technology Control Regime onprivate entities as if so-called private companies in China can hoodwink the Government.

17.During their meetings with each other, Prime Minister Wen Jiabao and Prime Minister Manmohan Singh had agreed in principle that anyborder settlement between the two countries should not involve an exchange of populations and should be restricted to unpopulated areas.The Chinese subsequently wriggled out of this and reportedly said that this would not apply to Tawang in Arunachl Pradesh. They aredemanding that India should agree to transfer the Tawang Tract to China even if it is a populated area.

18. They have now added to the suspicions in the minds of many in India by the way they reportedly conducted themselves in Vienna. Duringthe last two years, they had repeatedly assured the Indian leaders and other interlocutors that they would not pose a problem in the way ofthe NSG granting a waiver, but in Vienna, their role was allegedly far from helpful. They did not openly try to oppose a consensus, but theytried to delay it for as long as they can by encouraging the opposition of smaller nations such as Austria and Ireland. They were evidently hoping that negotiations fatigue would set in and delay a consensus before the US Congress completed its term.

19. The "Mail Today", a New Delhi-based daily, reported as follows on September 8,2008: " Addressing Saturday's meeting (of the NSG) atVienna, Cheng Jingye, head of the Chinese delegation, said it was China's hope that the decision taken by the NSG would stand the test oftime and contribute to the goals of nuclear non-proliferation and peaceful use of nuclear power. It was also China's hope that the NSGwould equally address the aspirations of all parties for the peaceful use of nuclear power while adhering to the nuclear non-proliferationmechanism." The second point was apparently made with Pakistan in the Chinese mind.

20. This has been the standard Chinese formulation. It was expected even before the Vienna meeting that the Chinese would reiterate thisformulation without standing in the way of a consensus. This is what the Chinese ultimately did at Vienna, but the way they avoided playinga role in support of India has given rise to a perception in the minds of many in India that this was yet another instance of the Chinese notkeeping their word. This suspicion will continue to influence Indian attitude to China despite the spectacular improvement in trade andother fields.

21. Yang Jiechi, the Chinese Foreign Minister, who visited New Delhi on September 8 and 9, 2008, for talks with Indian leaders stronglydenied reports emanating from Indian media sources in Vienna that China had tried to block a consensus at Vienna.He said: " I am surprisedby these reports. Facts speak louder than words. China has always worked responsibly towards consensus both in the International AtomicEnergy Agency and the NSG." Despite his denial, the suspicion persists that China's attitude at Vienna was far from positive.

22.Why did China hum and haw at Vienna before going along with the consensus? Was it out of a feeling of solidarity with Pakistan, whichwill not be a beneficiary of a similar nuclear trade? Or was it a futile attempt to save face for the Communist Party of India (Marxist), whichhas doggedly opposed Indo-US co-operation whether in the nuclear or any other field?(11-9-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStrudies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )

4 comments:

san said...

Mr Raman, I agree that India will be forced to give preference to US suppliers, however the Indian energy market is big enough that it can accommodate all willing vendors, particularly also the Russians and French.

I certainly feel that we should be wary of the Americans, who can be "Indian givers," taking away what they have offered. But I would also caution you to remember the example of the Gorshkov aircraft carrier, and understand that the Russians we are dealing with today are not quite as magnanimous as their Soviet antecedents. Putin & Co are shrewd Russian nationalists, and as such they too may become "Indian givers", taking away things previously offered, as their agendas and priorities are different from the Soviets, so we should not be overly blinded by past friendships.

India's traditional support of multipolarity reinforces the idea that it should open up trade with as many available partners as possible, and the 123 deal is consistent with this. While 123 may influence the apportionment of contracts, it still opens up trade avenues that were previously closed. The question of apportionment of contracts allows India a little more room to maneuver, than does a totally hands-off attitude towards the West. With the waiver, we are keeping more options open for ourselves.

Meanwhile, I hope we will continue to develop the thorium breeder technology, for eventual self-sufficiency.

Raakesh said...

Mr Raman,
I completely agree with your reasoning that the deception by the Chinese has evoked suspicion in India.I would like to ask your opinion on how India should prepare to defend its interests against the Chinese or their proxies in Pakistan.

san said...

Mr Raman,

Also consider what happened to Enron's infamous Dhabhol Power Project, which Dick Cheney negotiated through backroom meetings with Sonia Gandhi. Congress brought in the deal, and when Shiv Sena came to power they immediately tossed out the deal, on the grounds that it was illegitimate and unreasonable. It is said that this reversal of Dhabhol was what led to the collapse of the Enron empire.

Likewise, if the US attempts any shenanigans on 123, then India can pull out of the deal early on, and leave the US high and dry. They can't shove their sales down our throats after all -- at best they can simply withdraw the NSG waiver.

sundaram said...

Mr. Raman,

1. Perhaps you are reading too much into the evasive answers of the government officials, when asked if we are going ahead with Russian contracts.

Other countries like Russia and France wouldn't have actively campaigned for India at the NSG if they do not expect significant benefits in the future for their companies.

What's more, it is our sheer market size that could help us play one country against the other in the future. Add to that the fact that most plants will come up in the private sector, the scenario can get quite complex. In the end, it is quite possible that the profit motive of businessmen, the self-interest of other countries and not the least our increased economic clout could be the biggest insurance.

2. Coming to your implied comment that the Russians weren't 'money-minded'. I am not willing to believe that the Russians supplied us nuclear technology without strings attached, especially if such deals were made with the government.