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Tag Archives | iaea

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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Sauce for goose

The China-Pakistan nuclear deal: where have all the ayatollahs gone?

The Guardian carried a rather sensationalist piece by Chris McGreal on how Israel had, at one point, offered to sell nuclear weapons to South Africa.  Some in the United States are fuming at the idea that a U.S. “proxy” considered selling nuclear weapons to an “autocratic, unstable state” (South Africa was under apartheid at the time) — somehow, apparently, this undermines the U.S.’s “moral authority.”  It is another matter entirely that this report had little factual basis.

In fact, the outrage that is non-story has generated has largely obscured the very credible, and potentially significant story coming out of Beijing:

Chinese companies will build at least two 650-megawatt reactors at Chashma in Punjab, the Financial Times said.A statement posted on the website of the China National Nuclear Corporation on March 1 said the financing for two new reactors at Chashma was agreed by the two sides in February.

“Our Chinese brothers have once again lived up to our expectations,” the Financial Times quoted an unidentified Pakistani official as saying of the deal, which would help Pakistan cope with a crippling energy crisis. “They have agreed to continue cooperating with us in the nuclear energy field.” [Dawn]

Some sources indicate that the U.S. is unlikely to broach this issue with the Chinese.  In some ways, the Obama administration may feel that this alleviates its own moral burden, faced with increasing pressure from Pakistan for a civilian nuclear deal.  Of course, the administration would be missing the point — Pakistan’s desire for civilian nuclear energy is subordinate to its desire for parity with India in the eyes of the U.S. In that regard, Pakistan’s quest for a nuclear deal with the U.S. has nothing to do with its need for nuclear energy.

The implications of  specific aspects of the China-Pakistan deal will need to be further examined when more information is made available.  If their previous track records are any indication, these reactors will not be subject to IAEA safeguards or inspections.   Other questions exist — will China seek to “grandfather” the new reactors with those it built in Pakistan prior to joining the NSG?  If not, how could China possibly  ensure that an exception is made for Pakistan at the NSG in the event that the reactors are kept out of IAEA’s purview?

Purely from the perspective of strategic balance in South Asia, this deal may not alter much.  However, a couple of issues need to be considered in light of this deal. First, the impact of this deal is of greater consequence to the Middle East than it is to South Asia — particularly to Saudi Arabia and Iran.  Saudi Arabia’s “nuclear-capacity-by-proxy” strategy has paid rich dividends via Pakistan’s frantic acceleration of weapons production on its behalf.  Two 650 MW reactors will give this cozy arrangement fresh impetus, if any was needed.  By extension, this puts considerable strain on Iran’s own nuclear program.

Second, what does the deal say about non-proliferation ayatollahs in the Obama administration? Clearly, altered dynamics after the economic crisis, and China’s importance in negotiating through the nuclear issue with Iran leaves the U.S. with minimal leverage over China.  China, for its part, is using the opportunity to violate the spirit of those existing non-proliferation regimes on a technicality.  Of course, it has been doing this for ages, rather clandestinely.  Now, it does so brazenly.

There may be little that India can do to prevent the deal from going through.  In this context, the 2010 UN NPT RevCon directive to India (and Israel) to sign the NPT is absurd and deserving of contemptuous dismissal. A world order where global nuclear non-proliferation regimes attempt to shackle, curtail and impose significant costs on those willing to abide by established norms, but lack the capacity to punish those who willfully violate them in letter and spirit is unacceptable.   The necessity for India to be at the forefront of defining a new world order where verifiable, non-discriminatory nuclear disarmament is the objective, is felt more acutely now than ever.

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The “unscrupulous” Mr. Karzai

When the solid matter hits the air circulating equipment, everyone looks out for their own interests. Are we?

“For it is dangerous to attach one’s self to the crowd in front, and so long as each one of us is more willing to trust another than to judge for himself…

Seneca the Younger, On The Happy Life

Groupthink is a dangerous thing. And while they may disagree about everything else under the sun, Washington-types have unanimously directed their ire at Afghan President Hamid Karzai.  An apparent quote from an unattributable source about Mr. Karzai threatening to join the Taliban, if international pressure on him did not cease, made the rounds in international media.  Ex-UN envoy to Afghanistan Peter Galbraith questioned Mr. Karzai’s mental condition and suggested that the president may have a drug use problem.

Steve Coll’s blogpost followed suit, with a detailed account of the pervasive corruption that the Karzai administration had fostered.  Fred Kaplan on The Slate asked whether a successful COIN operation could in fact be carried out in Afghanistan, given the manner in which Mr. Karzai is running things in Afghanistan.  Former US Assistant Secretary of Defense, Bing West, rather plainly called Mr. Karzai an “obstacle to progress” in his op-ed in The New York Times.

Washington’s foremost thinkers and analysts, singing together in perfect harmony. Mr. Kaplan sums up the groupthink perfectly — the US is of the opinion that Mr. Karzai believes he (and by extension, Afghanistan) is too big to fail, and with the stakes being as high as they are, the US is left with no option but to continue to pour resources — monetary and military, to sustain the Karzai government.

But a closer inspection at events unfolding in the region presents a clearer picture of Mr. Karzai’s intentions and US angst. Hamid Karzai began his second  term in office by stepping up engagement with China.  Mr. Karzai then invited Iranian President Mahmoud Ahmedinejad, who proceeded to chastise the Americans in the presence of his host.

Therein lies the US’s angst — Hamid Karzai appears eager to consolidate power and dilute US influence in Afghanistan.  To accomplish this, he needs the assistance of other regional powers — hence, the dialog with China, the invitation to Iran and the visit to Islamabad. He sees the benefits in ensuring an extended US stay in Afghanistan (the Americans are, after all, his primary financiers), but no longer desires to see the US as  the absolute dominant power in the country.

This is effectively the source of frustration in Washington.

As China, Pakistan and Iran prepare to step up engagement with Afghanistan, there are question marks about where the recent developments leave India.  While the Karzai government has in the past pressed New Delhi to play a larger role in the country, India has restricted its involvement in Afghanistan to providing humanitarian and  economic assistance. Frustrated, the Karzai regime now looks to hedge its bets elsewhere.

This puts India in a precarious position.  The prospects of a reemergence of a Russia-India-Iran order in Afghanistan aren’t great, given that Indo-Iranian relations are at a low.  But we’re still very far away from throwing in the towel.  There are significant caveats and complications in the Afghanistan-Pakistan-Iran relationship for it to become an order.

Both India and Iran share mutual interests in Afghanistan, and it is therefore imperative that Prime Minister Manmohan Singh’s government make amends for its folly at the IAEA. India’s attempts at revitalizing its relationship with Russia is a positive step — it is important that this relationship extend itself to securing both nations’ mutual interests in Afghanistan.

Ultimately, it is in India’s best interests that no one order — be it the US and its Western allies, or the Pakistan-Saudi-China triumvirate — dominate Afghanistan’s landscape.  This landscape will include the “unscrupulous” Mr. Karzai, and increasingly, warlords (affiliated as well as adversarial) and Taliban remnants.  India must therefore work with regional powers and political players to ensure that its interests in Afghanistan are protected, at a time when power equations in the war-torn nation are rapidly changing.

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Reconnecting with Iran: My article in Pragati

India’s independence on foreign policy has taken a beating during the last five years of UPA rule.  For the sake of a nuclear deal that now, ironically,  sits in the new US administration’s cold storage, the UPA sacrificed India’s reputation in the congress of developing nations by voting against Iran — not once, but twice — at the IAEA.   I make the case for reversing the current trajectory of our relationship with this important Islamic republic in this month’s Pragati .

… India’s engagements with the United States, and increasingly with Israel, amidst Iran’s growing isolation post-9/11, affected the ability of the two countries to collaborate on areas of mutual interest, including energy security and stemming the growth of Sunni extremism in the region. During this period, two events effectively put paid to the momentum gained by the New Delhi Declaration – India’s voting against Iran at the International Atomic Energy Agency (IAEA) in 2005 and India’s launching of the Israeli reconnaissance satellite TecSAR (“Polaris”) in 2008.

The UPA’s naiveté with regard to relations with Iran will come back to haunt the nation. India’s voting against Iran at the IAEA was perhaps the biggest strategic foreign policy blunder since the turn of the millennium. It was less a reflection of India’s conviction against nuclear proliferation and more an evidence of America’s coerciveness, effectively tying the Indo-US nuclear deal to India’s vote.

Read more about it on Pragati ( PDF, 2.2 MB)

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