Center for Arms Control and Non-Proliferation

U.S.-India Nuclear Energy Deal: What's Next?

by Kingston Reif [contact information]

by Leonor Tomero [contact information]

August 6, 2008

For related analysis, see:

U.S.-India Nuclear Energy Deal: Status and Update
Why the U.S.–India Nuclear Accord is a Bad Deal

Since the summer of 2007, when India and the International Atomic Energy Agency (IAEA) negotiated a safeguards agreement, the U.S.-India nuclear deal has been in limbo due to opposition from Indian political parties like the Bharatiya Janata Party (BJP) and the Indian Communists. The Communists, who have provided the Congress Party-led governing coalition with its parliamentary majority for the past four years and see the nuclear deal as a threat to independent Indian foreign policy, threatened to withdraw from the coalition government led by Indian Prime Minister Manmohan Singh if India pushed ahead with the deal.

Until early July, meetings within India's governing coalition failed to produce an agreement. However, in a political maneuver, Singh was able to secure the support of the Samajwadi Party for the deal and circumvent opposition from the Communists.

Bolstered by the Samajwadi Party's support, Singh submitted the safeguards agreement to the IAEA's Board of Governors. In response, India's Communist parties formally ended their support for the governing coalition and called for a confidence vote in Parliament, which was held on July 22. As expected, the Singh government survived the confidence vote, thereby avoiding the possibility of early elections. The lead-up to the vote was marked by numerous incidents of questionable political maneuvering, particularly on the part of the Congress Party and its allies, including the renaming of an airport after a key lawmaker's father and the temporary release of a number of jailed Congress Party lawmakers – some convicted murderers – so they could take part in the vote.

On August 1, the IAEA Board of Governors approved the India-specific safeguards agreement. Though the safeguards agreement passed by consensus, it was not uncontroversial.

As a next step, the Nuclear Suppliers Group (NSG), must exempt India from international rules barring nuclear trade with non-NPT signatories, after which the U.S. Congress will be free to vote on the final U.S.-India 123 agreement. NSG members such as Ireland, Norway, Austria, Brazil, and Japan all warned that their support for India at the IAEA did not mean that they would not express reservations at the NSG. New Zealand, which is a member of the NSG but not of the IAEA Board of Governors, has also cautioned that its support should not be taken for granted. A special NSG session to begin discussing the U.S.-India deal is scheduled for August 21, and at least two sessions are likely to be necessary to reach an agreement on a rule change.

With time running out to complete the deal before Congress is set to adjourn on September 26, both the Singh government and the Bush administration are pushing hard to rush the deal through the NSG and Congress. Commenting on the recent developments in a conference call with reporters on July 23, David Mulford, U.S. ambassador to India, stated: "The U.S. has been ready and is now geared up... We are very actively on our way... We hope we can be in a position to send the legislation to Congress in early September." In a press briefing held on August 4, acting State Department Deputy Spokesman Gonzalo R. Gallegos declared that the administration would be ready to submit the 123 agreement "on or about September 8th."

For this to happen, the NSG would have to complete its deliberations on the deal by early September, an incredibly short time-frame given that the NSG isn't scheduled to meet until August 21.

Even in the unlikely event that Congress does take up the 123 agreement immediately upon returning from its August recess on September 8, there does not appear to be enough time left on the legislative calendar for Congress to take action on the agreement before it adjourns on September 26. This is due to the fact that the Atomic Energy Act of 1954 requires that the President consult with the Senate Foreign Relations Committee and the House Foreign Affairs Committee for no less than 30 days (counted as days of continuous session of Congress) concerning the terms of the proposed agreement. If the President begins consulting with the Committees on September 8, only 18 days will elapse by the time Congress is scheduled to adjourn, not the requisite 30.

Though more time could be set aside to consider the agreement if Congress meets following the Presidential election in November, both Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi have all but ruled out a lame-duck session.

Rushing the agreement through the NSG and Congress would be ill-advised, particularly since recent developments raise additional concerns about the Bush administration's commitment to upholding the limited but critical nonproliferation objectives enshrined in the Hyde Act. At a February 2008 hearing before the House Foreign Affairs Committee, Secretary of State Condoleezza Rice pledged that "We will support nothing with India in the NSG that is in contradiction to the Hyde Act. It will have to be completely consistent with the obligations of the Hyde Act." However, during his July 23 conference call, Ambassador Mulford was less categorical, stating that the U.S. is seeking a "clean exemption" for India that "does not have conditions attached to it by the NSG."

Meanwhile, the Indian government continues to assert that it believes the Hyde Act to be irrelevant. As Indian National Security Adviser M.K. Narayanan put it on July 2, "It is the 123 agreement and its provisions that indicate the obligations of both sides. The 123 agreement clearly over-rides the Hyde Act and this position would be clear to anyone who goes through the provisions."

With the NSG's August 21 special session rapidly approaching, NSG members and Congress need a full and clear explanation from the Bush administration about how it interprets the congressionally mandated conditions and requirements contained in the Hyde Act. Key issues to be addressed include:

Will the United States and other NSG states terminate nuclear trade with India if it resumes testing? Whereas the Hyde Act states that trade must be discontinued if India conducts a nuclear test, there is nothing in either the India-specific safeguards agreement or the 123 agreement that says nuclear trade with India must cease if India resumes testing.

Will the NSG demand that IAEA safeguards on India's civilian nuclear facilities apply in perpetuity, as required by the Hyde Act? Both the safeguards agreement and the 123 agreement stipulate that India may take unspecified "corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies." The words "permanent" or "in perpetuity" are nowhere to be found in either document.

Will the NSG assist India in developing a "strategic reserve" of nuclear fuel to guard against any disruption of supply, even if that disruption is caused by India's resumption of nuclear testing? Doing so would contradict the clear intent of the Hyde Act, which requires that fuel provided to India "should be commensurate with reasonable reactor operating requirements."

Will the NSG allow for the transfer of sensitive uranium enrichment and plutonium reprocessing technology and materials? Though the Hyde Act prohibits such transfers unless certain conditions are met, the 123 agreement holds out the possibility that India could acquire sensitive dual-use items that could be used in enrichment, reprocessing, or heavy water production facilities.

Answers to these questions are absolutely critical because they have profound implications for U.S. national security and the nuclear nonproliferation regime. A "clean" exemption for India in the NSG would violate the clear intent of the Hyde Act; undermine the NSG's cohesion; and greatly weaken international rules prohibiting nuclear trade with non-NPT signatories. Moreover, if other NSG countries are not required to adhere to the same conditions and restrictions as those mandated by the U.S. Congress in the Hyde Act, U.S. businesses could be put at a competitive disadvantage.

Given the many outstanding questions and contradictions that have yet to be resolved, the NSG and the U.S. Congress must not be bullied into making a hasty decision on the U.S.-India nuclear deal. The Bush administration's desire to complete the deal before it leaves office cannot be allowed to come to fruition at the expense of key U.S. nonproliferation objectives.