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Winning the small nuclear battles

Dr. Singh and Mr. Obama must move forward on nuclear trade when they meet this week.

Some newspapers and political parties would have us believe that the PM is in New York with the express intention of selling India’s soul to America.

They contend that India’s Nuclear Liability Act (NLA), which allows for costs to be imposed on the supplier in the event of a nuclear disaster in India, is about to be sold down the river by the PM in order to remove impediments to the participation of U.S. firms in civil nuclear trade with India.  There was furor when it emerged that the Attorney General had issued an opinion indicating that the Nuclear Power Corporation (NPCIL) had the right to waive the liability provision, if provided for in a contract.

Outraged opposition parties and left-leaning media outlets argued that India was bypassing its own law to please the U.S.  A few observations on the subject:

The language in the NLA appears to be fairly clear on the applicability of supplier liability.  Clause 17 reads:

The operator of the nuclear installation, after paying the compensation for nuclear
damage in accordance with section 6, shall have a right of recourse where-

(a)    such right is expressly provided for in a contract in writing;
(b)    the nuclear incident has resulted as a consequence of an act of supplier or his
employee, which includes supply of equipment or material with patent or latent defects
or sub-standard services;
(c)    the nuclear incident has resulted from the act of commission or omission of
an individual done with the intent to cause nuclear damage.  [THE CIVIL LIABILITY FOR NUCLEAR DAMAGE ACT, 2010]

We’ll leave matters relating to the legal interpretation of the language in the Act to the experts on the subject, but if our admittedly untrained legal interpretation is correct, clause 17(a) does allow for supplier-side liability if “expressly provided for” in a contract between the operator (in most cases, GoI) and the supplier.

If this is indeed true, then the question of “bypassing” Indian law simply doesn’t arise.  The law itself does not make supplier-side liability mandatory.  Further, it the begs question of what the opposition — which was out screaming blue murder this past month — was doing when the bill was being debated in 2010.  Even assuming their very busy schedule of staging walkouts in Parliament got in the way of them expressing an opinion when the bill was being debated, what have they been doing the past two years since its enactment?

The NLA in its current state is simply incompatible with the IAEA Convention on Supplementary Compensation (CSC), which India undertook a commitment to accede to.  Contingent on these incompatibilities, India has signed the CSC but not ratified it, as ratification would require a change in our liability laws.  It is strange then that we appear so eager to be brought into the mainstream of the global framework for civil nuclear commerce and yet not want to be bound by its rules.

The issues pertaining to supplier-side liability are not U.S.-specific.  The truth is that no one is willing to do business with India given the costs imposed by the NLA on suppliers.  The Russians have refused to bring Kudankulam 3 and 4 under the ambit of the NLA.  The French company Areva has also made it clear that it will not be able to move forward, given the language in the NLA. The Canadians have expressed reservations.  Potential Indian suppliers themselves appear to be uneasy with supplier-side liability with FICCI warning that the NLA “threatens to completely undo the government’s efforts to accelerate nuclear power generation…”

The AG’s interpretation that the operator had the ability to contractually invoke or exclude supplier-side liability actually dates back to October 2012, when his legal opinion was provided during negotiations on Kudamkulam with the Russians.  There was not so much as a whimper in the left-leaning media then, but apparently now this interpretation causes a “dilution” in our liability laws to allow the prime minister to carry as a “gift” to the U.S.

The Cold War ended two decades ago, folks.  There is no benefit in India pretending to be more soviet than the Soviet Union in 2013.

Many in India are yet to appreciate the impact the NLA has had on the general mood towards India in DC.  This was about more than just nuclear commerce.  Presidents of the U.S. do not make phone calls to their Chinese counterparts asking them to drop their opposition to a third country’s bid for an NSG waiver merely at the prospect of being able to sell few nuclear reactors.  India would have most likely remained a nuclear paraih were it not for the efforts of the Bush administration.

Since obtaining an NSG waiver, the UPA has bungled like only it can.  Debates on nuclear liability were emotive rather than pragmatic, drawing wrong lessons from the Bhopal tragedy.  While the NLA automatically precluded the possibility of the participation of U.S. companies in civil nuclear commerce with India, companies in Russia and France, which were initially underwritten by their governments, were able to enter into exploratory discussions with India.  With Russia and France no longer willing to abide by the NLA, the prime minister arrives in the U.S. attempting to salvage a relationship and an economy.

Realistically, neither the U.S. nor India have each other on their list of top priorities at the moment. The Obama administration is faced with a precarious situation in Syria and is battling opposition on healthcare reform and budget disputes.  Meanwhile, with India heading to polls in May 2014, the UPA is effectively in a holding pattern with very little political capital at its disposal for brave new ideas.

Under the circumstances, if a pre-early works agreement can indeed be concluded between NPCIL and Westinghouse, it might help arrest the doom and gloom and allow both sides to reevaluate positions sometime next year.  This is about as much as we can hope for when Dr. Singh and Mr. Obama meet on Friday.

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India at the UNSC on Libya

India’s 50-50.

There has been considerable uproar on India’s decision to abstain from voting on the imposition of a No Fly Zone (NFZ) in Libya at the UNSC.  Some have suggested that the decision to abstain doesn’t bode well for a nation seeking a place at the high altar in the congress of nations.  India’s non-vote however, has short- and long-term implications, which need further consideration and analysis.

UNSC’s resolution No. 1973 on Libya reads as follows:

[T]he Council authorized Member States, acting nationally or through regional organizations or arrangements, to take all necessary measures to protect civilians under threat of attack in the country, including Benghazi, while excluding a foreign occupation force of any form on any part of Libyan territory — requesting them to immediately inform the Secretary-General of such measures. [UN]

India, in its explanation for abstaining from the vote indicated that its reservations were based partly on “far reaching” measures adopted by the UNSC.  Indeed, there is now indication that the inclusion of the phrase “all necessary measures” went beyond what the Arab League initially envisaged when it first appealed to the UNSC for an NFZ in Libya.  The resolution, for instance, did not rule out airstrikes against Col. Qaddafi’s land forces advancing towards  Benghazi.  It also empowered a collection of states (e.g., Britain and France, the Arab League) to act unilaterally against the Libyan army as it saw fit.

There now appear to be considerable gaps in perception on approach and objectives among the primary actors, U.S., Britain and France, and the Arab League.  The question that India must answer is whether or not it is in India’s interests to see a change in regime in Libya.  To be sure, Muammar Qaddafi has been a thorn in India’s flesh for many years — on clandestine nuclear co-operation with Pakistan, on Kashmir — but how certain is India that the alternative to Col. Qaddafi couldn’t be as bad, if not worse?

For many reasons, India’s economic interests in Libya are minimal.  Bilateral trade has steadily declined over the past several years.  Libya just about figures among India’s top 50 import partners*, right below the People’s Republic of Congo (we also export less to Libya than we do to any other Arab country*). India’s energy interests in Libya are not substantial when compared to other countries in the region, and recent reports indicate that ONGC Videsh and OIL had, or were in the process of  relinquishing their stakes in at least four exploration blocks in Libya.

On security issues, Libya has had a history of cooperation with Pakistan on financing and acquiring nuclear technology.  However, under agreement with the U.S. and in an apparent bid to end its international isolation, Tripoli surrendered its nuclear weapons components —  including centrifuges, uranium and sensitive documentation —  in 2004. Though, to be fair, Col. Qaddafi’s calculations on the utility of nuclear weapons may change, should he survive the uprising.  As for Col. Qaddafi’s periodic rants about Kashmir at international forums, they are about as likely to have an impact on the status of J&K as OIC’s time-honored traditions have had of routinely issuing statements of concern at the behest of Pakistan about J&K all these years.

Taking these arguments as a whole, India’s decision to abstain from the vote may not have been imprudent.  However, the issue of whether and to what extent the ruling coalition’s stance was influenced by what it considers “domestic political compulsions” requires discussion.  In the long-term, it raises troubling questions on what sort of a role India will likely play in shaping the world’s security.

If the ruling government abstained from the Libyan vote because of domestic sensitivities, then what is to stop it from doing likewise on any future UNSC votes against nations that may happen to be Arab?  To be candid, it is not Saudi Arabia that is going to favorably influence the UNSC to grant India permanent membership, even if a UNSC expansion were remotely likely.  Secondly, if India is going to abstain from every vote on contentious issues, they why even ask for a permanent seat at the high altar?  Contentious issues will always be put to vote at the UNSC, by the very nature of the Council.  The UNSC is hardly going to sit around debating whether India should be playing an extra bowler vs. Australia in the quarter finals of the World Cup.

It is no use saying India deserves a permanent seat at the UNSC because it represents 1/6th of humanity, if that 1/6th of humanity seldom expresses an opinion.  UNSC membership is not granted based on entitlement — if it were, there would be no place in it for either Britain or France.  While it would be impractical to expect domestic political compulsions not to play a role in how India conducts itself in international affairs, it must also recognize that its aspirations to be regarded as a global actor are untenable if it is not willing to pursue those hard choices that promote its national interests, but impact international or domestic political considerations.

* Department of Commerce, April 2010 — September 2010 figures

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The ties that bind

Enough about curry and cricket.

U.K.’s Prime Minister David Cameron is in India on a three day state visit.  His visit comes on the heels of his trip to Turkey, where he pledged to support that country’s membership to the European Union.  Some say that is part of the Mr. Cameron’s new foreign policy initiative to woo the East.  Indeed, in an op-ed in The Hindu, Mr. Cameron declared as much:

From the British perspective, it’s clear why India matters. Most obviously, there is the dynamism of your economy. In the U.S., they used to say: “Go West, young man” to find opportunity and fortune. For today’s entrepreneurs, the real promise is in the East. But your economy isn’t the only reason India matters to Britain. There’s also your democracy with its three million elected representatives — a beacon to our world. There is your tradition of tolerance, with dozens of faiths and hundreds of languages living side by side — a lesson to our world. And there is this country’s sense of responsibility. Whether it’s donating reconstruction assistance to Afghanistan, peacekeeping in Sierra Leone or providing intellectual leadership in the G20, India is a source of strength to our world. [The Hindu]

Faced with government debt and high levels of unemployment, Mr. Cameron will do what he must to revive his country from the global economic slump.  At the backdrop of a domestic debate on immigration, Mr. Cameron arrived in Bangalore — not New Delhi — visiting Infosys’ technology park and HAL, where a $800 million deal between BAE and HAL for 57 advanced jet trainers (AJTs) was signed.

The U.K. is already India’s largest trading partner in the E.U.  Trade between India and the U.K. has, and will continue to amble along, increasing annually in absolute terms, while decreasing in terms of U.K.’s overall contribution to India’s economy. Certainly, India is open for business and any mutually beneficial opportunity for trade and commerce is welcome.  But if the goal of Mr. Cameron’s visit is to forge the bonds of an “enhanced relationship” with India,we will need to move beyond the (dare I say) mundane and begin talking about issues of strategic importance to each other; for India, this includes  energy and security.  Indeed, France has shown that such an engagement model can be successful.

In this respect, news of progress on civilian nuclear cooperation and the AJT deal, though long overdue, is perhaps welcome.  However, it is as yet unclear if U.K.’s leaders truly understand and are willing to commit to a more broad-based partnership with India.  It is also unlikely that India will bother to sit around and wait.

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US-Russian START Treaty

Find a lofty ideal; use creative accounting to make it work.

Non-proliferation hawks in the Democratic Party will be happy — the United States and Russia sealed the deal on a “new” START treaty on taking steps towards nuclear disarmament.  US President Barack Obama feels strongly about the issue and wants to work towards a multilateral framework for eliminating nuclear weapons and controlling nuclear material.  In this respect, START III sounds like a great idea; except, as they say, the devil is in the details.

According to the treaty, the United States and Russia will reduce their “deployed weapons” to 1,550 over a seven-year timeframe.  Deployed weapons only, not weapons held in reserve.  In addition to deployed weapons (~ 2,200), the US also has 2,500 weapons in active and inactive stock, which are not within the treaty’s purview.   So right off the bat, the scope of START eliminates about 50% of the US’s total possible inventory.  Second, upon Russia’s insistence, each heavy bomber deployed with weapons counts as “one weapon” towards that magic number of 1,550 (although each bomber will likely possess multiple weapons).  Pretty fancy stuff.

Some very clever people help us out with the arithmetic:

The United States currently deploys approximately 2,126 strategic nuclear warheads, with a comparable number of warheads in reserve. Russia is believed to deploy approximately 2,600 strategic nuclear warheads. However, since each deployed heavy bomber will now count as only one warhead, under New START the U.S. currently deploys far fewer than 2,126 warheads (according to the best estimates we currently have 500 warheads on 60 or 113 bombers – depending on how you count; if you do the math, that already puts us at 1700-1800 warheads)! [Nukes of Hazard]

In addition to only addressing “deployed” weapons, the cap is specific to deployed strategic weapons only — ICBMs and SLBMs.  This very neatly takes the US’s 500 deployed tactical nuclear weapons (and the 600 tactical weapons in stockpile) out of the the treaty’s purview ( link).  There is also some ambiguity over whether the treaty caps US’s ambitious ballistic missile defense systems (BMDS) project — speculation is abound that it does.  However, the White House has already tried to preempt the battle it will have on its hands with this little fact-sheet.

What does START III mean to the rest of the world? Even with 1,550 nuclear weapons each, the US and Russia will be so far ahead of the third largest nuclear weapons state (France, with 300 weapons) that it is unlikely to have a direct impact on disarmament.  Of course, some countries might choose to “right size” their arsenal (as indeed France is doing), but these are not decisions inspired by START.

START III may be just the sort of thing to parade around New Delhi, coaxing it to ratify the alphabet soup of non-proliferation treaties.  This is a non-starter.  We live in a neighborhood where one power willfully flaunts the terms of the non-proliferation treaties that it is signatory to, and is increasingly belligerent in its dealings with India.  And the lesser said about our other nuclear neighbor’s non-proliferation record, the better.   Treaties such as START III can only be conceivable to lesser nuclear powers like India once minimum credible deterrence is achieved (for which there is no magic number).  Until such time, let such treaties be part of the lofty ideals of countries with enough nuclear weapons to destroy the world several times over.

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