COLLOQUIUM Indo-US Nuclear Deal: A Debate

Indo-US Nuclear Deal:A Debate

Jasjit Singh, T P Sreenivasan, A G Gopalakrishnan,A N Prasad, G Balachandran, Sitaram Yechury, CUday Bhaskar, Ritwick Priya and Chepuri KrishnaAnil Gupta (Coordinator)

C O L L O Q U I U M

includes debate bypractitioners and

academicians on acontemporary topic

KEY WORDS

Indo-US Nuclear Deal

Nuclear Energy

123 Agreement

Non-ProliferationTreaty (NPT)

Nuclear Suppliers’Group (NSG)

Hyde Act

INTRODUCTION

Anil GuptaProfessorIndian Institute of ManagementAhmedabad

Understanding the implications of complex techno-political matters becomesnecessary when such matters indicate the possibility of affecting the long-term growth prospects while also disturbing the short-term political sta-

bility. The Indo-US Nuclear Deal brought the UPA Government almost to the brink.Despite restrictions on the dual use technologies (one which can be used for civilianas well as defence purposes), the Indian space, computer, and atomic energy scientistshave served Indian interests quite well. The fact, however, remains that a fullerexploitation of nuclear power for meeting our energy needs would require gettingout of the current restrictive regime. The Indo-US Nuclear Deal seems to provideone way (some believe, the only way) out of the current impasse.

The debate was organized primarily to expose our students at IIMA to thecomplexity of the issues seen from political as well as techno-managerial perspec-tives. The issues have seldom been discussed in such detail and with so much insightas provided here by some of the most competent people in this field.

There were several issues before the panel:

• To what extent nuclear energy was critical for meeting our energy needs whenits share even after a decade and a half would only be less than ten per cent?

• Should we enter into a relationship with a superpower like the US which, inthe event of major disagreements on foreign policy or security issues, mightcripple future supplies of fuel for the nuclear power projects?

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• Will the Deal constrain or actually expand the choicesfor India to import the technology or fuel or both?

• Given the limited reserves of uranium in the coun-try, would it be prudent to make investments in thissector without some assurance of future supplies?

• To what extent the option of thorium-based criticalfuel supply chain would be viable at the currentlevel of R&D capabilities and access to technolo-gies?

• Can we not generate similar extent of energy fromalternative means and if so, have we explored thoseoptions adequately?

• Given the emerging economic strength of India,would any superpower or nuclear supply groupmember country attempt to disrupt India’s econo-mic and foreign policy choices too drastically?

It is not possible that all theseissues will be discussed adequatelyin the limited space. But, the readerswould find a very illuminating de-bate in which some of the top expertsof the country besides the leader ofthe Left Front-supporting UPA Gov-ernment have participated.

I hope that the debate wouldhelp us all understand, analyse, andpursue the future choices with morelight than heat. The private industryhas already been participating insome of our strategic programmes for enhanced securityin future. This Deal may increase the participation of theprivate sector both domestic and international in pro-viding the energy options. At the same time, criticsargue that when domestic capabilities are about to matureand deliver results, going all hog for imports will de-moralize the scientists who have spent their lives inachieving the current national capabilities against allodds. It is not the first time that import of technologiesin strategic sectors has been contemplated at a time whendomestic options were getting concretized. The supercomputer is a good example. The ‘Param’ computerwould not have developed, had we been allowed toimport the super computer from abroad. The compar-ison, however, may not be completely valid. In the

current case, it is not just the technology but also thefuel, which we need to import. The time will tell whetherthe current stalemate on the subject would resolve itselfin a manner that Indian interests are served the bestpossible way without making too many compromises.

ONE, TWO, … THREE, …. GO!But the critical question is: Which way?

Air Commodore Jasjit SinghExecutive DirectorForum for National Security StudiesNew Delhi

If we are to judge the Indo-US Nuclear CooperationAgreement which appears stymied at this stage onthe touchstone of national interests, then we need

to revisit some of the important issues once again beforewe reach the point of no return beyond which we could

be jeopardizing our own future. Thebasic issue is that of greater accessto clean sustainable and affordable(in political, economic and techno-logical terms) energy without beingheld hostage to external factors.

It is obvious that we cannot andmust not allow the Agreement onnuclear power to jeopardize the stra-tegic nuclear weapons capability inany way – a capability for which thenation has borne a heavy price fordecades. Washington – and many

other capitals — clearly would like to see this capabilityrestricted if not eliminated. But the way in which thecurrent Agreement is framed, there is little to suggestthat, Hyde Act or no, this cannot become the vehicle forsuch hopes on the part of the Americans. But that doesnot imply that other methods, including the hope thatIndia’s deeper cooperation and engagement with theinternational community along with its rise to greaterpower and capability would not in and by itself reduceany need for building nuclear arsenal and hence encour-age restraint especially, but very hypothetically, ofsystems like Inter-Continental Ballistic Missiles (ICBMs)that could target the United States at a future date. Wewill need to remain vigilant in future for any “non-proliferation” measures to be instituted against us and

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It is obvious that wecannot and must not

allow the Agreement onnuclear power to

jeopardize the strategicnuclear weapons

capability in any way – acapability for which the

nation has borne a heavyprice for decades.

88 INDO-US NUCLEAR DEAL: A DEBATE

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protect our core interests. In fact, suc-cessful closure of this Agreementshould forestall any tendency in afuture Democrat administration topursue the old mantra of “cap, re-duce and eliminate” our nuclearcapability.

One of the greatest challenge toour future growth – better termed asour Comprehensive National Devel-opment – lies in energy availability.Oil is already hovering close to $100per barrel and is likely to only keepsliding upward in future as we movecloser toward the end of the oil age;and our imports are expected toconstitute as much as 90 per cent of the consumption.Outflow of capital to pay for imported oil would onlykeep increasing adding to import vulnerabilities. As itis, the major reserves of oil lie in regions of potentialpolitical instability and great power rivalry. We havelarge reserves of coal, but are still a long way from cleancoal technology. The result is that our import depend-ency on coal for thermal power plants is likely to growfrom 15-45 per cent in the coming years. Those worriedabout the US hegemony through the 123 Agreementneed to note that almost all this coal is imported fromAustralia, a close ally of the US!

Climate change and global warming is already amajor issue not only in the world at large but for us alsoin a variety of ways. El Nino effect on the eastern sea-board of the Pacific Ocean affects our rain patterns now.Ice cap on the North Pole is shrinking and its long impactwould be unprecedented. In our case, Indian agricultureis likely to remain Monsoon-dependent during thiscentury; and there is a need for continuing scientificenquiry on the likely effect of globalwarming on weather and rain pat-terns in India and their consequenc-es for agricultural growth in future.The central point is starkly obvious:We must shift as much as possibleto clean sustainable renewable sourc-es of our energy. It is here that nuclearenergy offers enormous pay-offs; butthese remain a non-starter withoutthe 123 Agreement for the simple

reason that we have uranium re-serves for a maximum of 10,000 MW,not even half of the target for 2020!With the nuclear cooperation reach-ing its logical end, we would be ableto generate 50,000 MW by 2050 bywhich time our own fast breedersystems would have taken over andthorium would be the fuel of choice.

Much has been made of the like-lihood of the US hegemony and Indiabecoming an American client statethrough the 123 Agreement on theassumption that all technology, in-vestment, and fuel supplies wouldcome from the US. But once the

Nuclear Suppliers’ Group (NSG) clears the slate and theIndia-specific IAEA Agreement on safeguards for powerreactors is agreed upon, the sources for the supply offuel would range from Russia, France, South Africa,Niger, Australia and others besides the US. Technologyfor power reactors would be imported where necessary(no doubt linked to investments in this sector) fromRussia, France, the US, Japan, EU and other developedcountries. All of them are looking for better relationswith the “rising India” with a growth rate of 9 per centper annum. The world also understands that nuclearpower for India would be critical to sustain that econo-mic growth in increasing the share of manufacturingindustry in national GDP. Russia was recently evenwilling to sign up additional four reactors at Kundaku-lam but New Delhi wisely opted to wait for the 123 Dealto go through and then get a formal nod from the NSG.

Much ill-informed opinion has been passed as expertknowledge in talking about the cost and safety of nuclearpower reactors. Both these factors have altered drama-

tically over the past two decades sinceChernobyl. Capital investment onnuclear power is high, but the recur-rent costs that renewable energy likethermal power plants require aremuch less making nuclear energyeconomically competitive. There alsohave been concerns about the stra-tegic assets losing out on a slipperyslope. Theoretically, this can hap-pen. But there is nothing in the 123

We must shift as much aspossible to clean

sustainable renewablesources of energy. It is

here that nuclear energyoffers enormous pay-offs;but these remain a non-starter without the 123

Agreement...

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We will need to remainvigilant in future for any

“non-proliferation”measures to be instituted

against us and protect ourcore interests. In fact,

successful closure of thisAgreement should

forestall any tendency ina future Democrat

administration to pursuethe old mantra of “cap,

reduce and eliminate” ournuclear capability.


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Agreement that points toward thatdirection. As regards nuclear explo-sive tests, it is difficult to imagine apolitical situation under which Indiawould test even without any Indo-US Agreement. In fact, Prime Min-ister Vajpayee had committed thenation to a moratorium on testingand his Foreign Minister had assuredthe international community thatIndia would not come in the way ofthe Test Ban coming into force whichcan happen only if India signs on!But the question of India’s futuretesting of nuclear weapons is not alimitation under the proposed Agree-ment; at worst, consultation may becalled for if circumstances do require tests.

But the irony is that the positive side of the NuclearAgreement has either not been understood or has beenwillingly ignored. Nuclear non-proliferation has been amajor roadblock on the path of full and friendly relationswith the United States and its allies which constitutenearly three dozen industrialized countries. Even Russiais now hesitant to deviate from the accepted norms ofnon-proliferation. Although all the major member coun-tries of the NSG are believed to be willing to endorsethe Nuclear Agreement with safeguards, concurrence ofthe US to this process is a pre-requisite in practical terms.Normalization of relations with the industrialized worldis an urgent necessity if we have to achieve our goal ofcomprehensive national development. One finds itamazing that after the country’s growth having beenboxed by sanctions mostly emanating from the nuclearissues, now that we have a historic opportunity to getthe big bolder behind us, we seem to be suddenly vac-illating as if afraid of life withoutsanctions!

T P SreenivasanFormer Ambassador of IndiaGovernor of IAEA

After two years of the mostextensive and exhaustivedebate nationally and inter-

nationally, no one seems to be clearabout the prospects of the Indo-US

Nuclear Deal of 2005. The UPA Gov-ernment, which piloted the deal withgusto till August 2007 and performeda negotiating feat by finalizing abilateral agreement with the US (the123 Agreement) and appeared to beprepared to go down with it, if nec-essary, has suddenly lost momen-tum. The BJP, which initiated a newstrategic partnership with the US andprepared the ground for the Deal,wants it renegotiated, with no cer-tainty that they can get a better deal.The Left, with its abhorrence ofpossible US domination on accountof the Deal, blows hot and cold. Forthe first time in Indian history, India

is in no position to operationalize an internationalagreement, which has been approved by its Cabinet. Thepath ahead is unclear for the Nuclear Deal.

Except for a few fanatics, who think that India cando without nuclear energy in the future, no one believesthat India can afford to continue its international iso-lation as a non-signatory to the Nuclear Non-Prolifer-ation Treaty (NPT). We know that we decided manyyears ago that the energy mix for India in the future willhave nuclear energy as an important component. Wealso know that our civilian nuclear programme cannotbe sustained at a level commensurate with our currenteconomic growth unless we have access to fuel andtechnology from abroad. We know, therefore, that weneed to have a deal of some kind at some time in thenear future with the nuclear weapon states. In fact,India’s diplomatic efforts since 1974 have been directedtowards securing such a deal without signing the NPT.Till 2005, the prospects for such a deal were gloomy,

particularly after India defied inter-national opinion and declared itselfa nuclear weapon state. Any Gov-ernment of India in the future, re-gardless of its ideology, will have toseek an accommodation with theinternational non-proliferation re-gime. What is unclear is the price weare willing to pay for such an accom-modation.

For Indian diplomats, who have

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For the first time inIndian history, India is in

no position tooperationalize an

international agreement,which has been approvedby its Cabinet. The pathahead is unclear for the

Nuclear Deal.

The irony is that thepositive side of the

Nuclear Agreement haseither not been

understood or has beenwillingly ignored. Nuclearnon-proliferation has beena major roadblock on thepath of full and friendlyrelations with the UnitedStates and its allies which

constitute nearly threedozen industrialized

countries.


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been engaged in disarmament nego-tiations for several years, the Indo-US Joint Statement of July 18, 2005was a dream come true. PresidentClinton, with all his goodwill forIndia, could not go beyond settingaside the nuclear issue and proceed-ing with co-operation in other areas,but President Bush showed an alternative to the NPTroute for India to end its nuclear isolation. India virtuallywon the nuclear weapon state status with the same rightsand obligations as the other nuclear weapon states. Inreturn, India reaffirmed its moratorium on testing; itagreed to separate the Indian military and civilian nuclearfacilities and place the civilian facilities under IAEAinspection and abide by the internationally acceptednorms for export control and fissile material production.The balance of rights and obligations in the Statementensured that we had a non-discriminatory regime inplace. Against the backdrop of the bitter arguments of31 years, the deal looked the best that we could ask for.

But a mix of ignorance, fear of the United States,and undue optimism about our own capabilities ignitedprotests against the Deal in India and the blind believersin non-proliferation in the United States and elsewhereraised a hue and cry. Both the Governments were pres-sured by their respective constituencies to become rigid,if not backtrack on the initial Agreement. In India, it wasthe scientific community, unaccustomed to external in-spections, which raised questions.The issue of the theoretical possibil-ity of testing by India was raisedrepeatedly, making India suspect inthe eyes of the world. They arguedthat the separation plan was expen-sive and unrealistic and that India’sdeterrent as well as its fast breederprogramme would be jeopardized bythe Deal. The non-proliferation Ay-atollahs in the US created the HydeAct of the US Congress, with theobjective of constraining the Admin-istration to put forward caveats of apolitical nature. The cumulative ef-fect of these debates was that theIndian and the US negotiators hadtheir hands and feet tied as they satdown to negotiate the enabling 123

Agreement.

It is a tribute to the negotiatingskills of the Indian diplomats andthe willingness of the US to go morethan half way that the 123 Agree-ment was successfully negotiated.The contentious issues of testing andreprocessing were resolved for the

purposes of the Agreement, even though doubts re-mained on both these issues. India has the right to test,but the US has the right to react! The reprocessing scenariois far from clear as the modalities are yet to be workedout.

The Government genuinely believed that the Agree-ment would move forward to the IAEA and the NuclearSuppliers Group (NSG) before being submitted to theUS Congress. But the bombshell came not from the IAEAor the NSG, but from the Leftist members of the UPAcoalition when they demanded that the Agreement shouldnot be operationalized as they saw the grave danger ofUS hegemony in it. It is not clear as to why they choseto oppose the Deal only after the Agreement was reachedwith the US. They felt, perhaps, that the US would notagree to the features we were seeking in the Agreementand, therefore, had remained silent. The Governmentwas unaware of the strong feelings in the minds of theLeft and tried to call it a bluff only to find that the Leftwas willing to bring the Government down on this issue.

The UPA relented in the end andvirtually put the Agreement in thecold storage. Not that it loved theNuclear Deal less: it loved powermore. In any event, if they gave uppower, the Deal would have alsofallen by the wayside.

The “unclear” deal will have towait for better times when we havea Government which has the abilityto implement agreements it negoti-ates with foreign governments. Butit remains to be seen in what circum-stances and under what conditionsthe Deal will be operationalized. Itis a Deal, which is good for India,good for the US, and good for theworld. But it has to be acceptable tothe members of the ruling coalition

The non-proliferationAyatollahs in the US

created the Hyde Act ofthe US Congress, with theobjective of constrainingthe Administration to put

forward caveats of apolitical nature. The

cumulative effect of thesedebates was that theIndian and the US

negotiators had theirhands and feet tied as

they sat down tonegotiate the enabling

123 Agreement.

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India has the right to test,but the US has the right

to react! The reprocessingscenario is far from clearas the modalities are yet

to be worked out.


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in India. In a democracy, the crucial test is not the meritsof the issue, but its perception by the majority.

A G GopalakrishnanFormer ChairmanAtomic Energy Regulatory Board

When a country talks about energy security,it looks at two primary issues: Where theprimary energy stores are going to come

from and the fact that countries which are keen on energysecurity stick to utilizing their own nationally availableprimary energy resources first. In fact, only if they arenear to exhaustion, they go looking for other resources.Similarly, one bases the energy systems on technologiesthat one can handle within the country, especially inthese days of technology barriers and difficulties ingetting assistance from abroad. If we can make it our-selves, even if it is slightly less efficient, in the comingyears, the smartest thing to do would be to stick to thetechnologies we possess. Now fromthis point of view, if we look at ourresources, the primary and the mostabundant resource is coal. Then thereis hydroelectricity from the point ofview of electricity generation andfinally, the thorium reserve. I wouldnot want to go into numbers but atleast for 50 to 60 years of power gen-eration and utilization, India has thenecessary amount of coal under theground. We are having problems in bringing it out ofthe surface— there are certain management and tech-nology-related problems that we have to overcome.

Talking about coal technologies, in the 1960s, weused to buy boilers and equipments for power stationsfrom abroad. From my experience as the Director ofResearch and Development in BHEL for ten years, I cantell you that when BHEL started manufacturing boilersand power systems according to the drawings obtainedfrom abroad, it was found that those boilers were notworking here at all because we were using it with Indiancoal whose properties were extremely different from theproperties of the coal for which the foreign equipmenthad been designed. It took about 10 years of indigenousR&D effort of our engineers, step-by-step, changing ma-terials and designs, to come to a boiler system whichlooked entirely different from the boiler system from

abroad but worked beautifully with 90-95 per centcapacity. And these are the kind of boilers that BHELhas got partly through its own efforts but mostly throughcollaborative technologies for all other parts of the systemincluding condensors, electrical equipment, etc. Today,BHEL is a premier institution of which we can be proudof in the whole of Asia if not in the world. It can producepower stations up to 1,000 Megawatt rating, thermal andhydrostations as well as most of the components for thepower plant along with companies like L&T. Thus, thereis self-sufficiency in this part of technology. At times,they actually starve for orders. Also, BHEL has latelyobtained the latest supercritical technology of worldstandards for powerstations. And, for about 20 years,they have also done work on coal gasification for whichthey have combined stations which would give almost45 per cent efficiency in the long run. Thus, in substance,coal technology as well as coal itself is available in India.

Hydropower is another great resource in our coun-try. We have been able to buildvarious hydroelectricity projects withthe help of our own engineers andour own designs equipped with ourown hydroturbines, primarily be-cause of the visionary leadership thatthis country had, both at the PrimeMinisterial as well as the engineers’level. We really do not require for-eign assistance; we can do it our-selves. We can also collaborate with

Nepal and the other neighbouring countries and en-hance our hydro potential.

Coming to nuclear power, although uranium hasalways been known as a fuel, there is a limited avail-ability of natural uranium. Since Nehru’s and Bhabha’stime, it was known that only 100-10,000 Megawatt of firstgeneration uranium fuel reactors can be made in Indiabut all these uranium reactors will produce enoughplutonium which can go in stages before we come to fastbreeder reactors which can convert thorium. Thoriumby itself, unlike uranium, is not a fuel. Thorium has tobe converted into a form of uranium— Uranium 233—which is what the breeder reactor will do ultimately.And, finally, in the last stage, the thorium and theUranium 233 produced by the thorium will be runningthe reactors. We would be totally free from the need ofusing plutonium and natural uranium. So, ultimately,

Thorium by itself, unlikeuranium, is not a fuel.

Thorium has to beconverted into a form of

uranium— Uranium233— which is what thebreeder reactor will do

ultimately.

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it is a self-sufficient system whichwill run on thorium and its by pro-duct. And thus, once again, we wouldreach a material and technologicalself-sufficiency.

Once the fast breeder reactor isconstructed, we need to test it at leastfor four or five years to understandall its nuances, make corrections, andmake sure that we have a system thatis completely in place. Next, it hasto go to a second type of breeder andonly then, we can go for thoriumutilization. There is a gestation pe-riod which cannot be cut short. Evenduring Bhabha’s time, it was under-stood that from the time one starts,it would take around 20 years for thethorium power to exponentially keep rising. But thatsuits us.

The 1974 nuclear explosion was a political decision.It was not the scientists who decided it; they helped, ofcourse. But that has changed the entire timescale of theoriginal programme. Because at that point when Bhabhawas planning the nuclear power programme, we did nothave to make our own forgings or tubes; in fact, it wasnot our plan to make everything elsein the country. It was available frommultiple sources. But, from 1974 on-wards, we were totally cut off. How-ever, the great missionary leaderslike Nehru, Bhabha, and IndiraGandhi could see in this the onlyway to get to thorium and be freefrom foreign hold on us. So, theykept going and in 1998, weapon testsfurther disturbed the Nuclear Pro-gramme. Therefore, if it is going totake another 20 years for the breed-er’s thorium utilization to take place,then the country will have to patient-ly wait as no one else is going tomake those thorium reactors for us.We almost certainly have 40-50 percent of the breeder programme com-pleted and we should be allowed tofurther complete it. So, the pro-

gramme for nuclear power genera-tion should be left alone. It is pro-gressing well. If it is not visible, itis because the gestation time is long.So, in the meantime, disturbing thenuclear programme and saying thatit is going so slow and that we willhave to get 40,000 Megawatt of fo-reign imported reactors does notmake any sense. It is merely the PrimeMinister, Montek Singh Ahluwaliaand others who want to bring the USinto our nuclear power sector. TheWestern countries—that want tobring the US into many sectors,nuclear power being one of them—are starving for orders and they havefound this market which they can

certainly enter. But that is not the logic according towhich we should plan our nuclear programme.

Now, let me skip to what I consider to be thedrawbacks of imported reactors. First, the exhorbitantcosts—It would cost us about Rs 10.5 crore per Megawattas against Rs 4 crore per Megawatt for thermal energyor other coal-based systems. Our own national reactorsare costing about Rs 7 crores per Megawatt but even atthat cost, we have to support the national reactor pro-

gramme because that is the only waywe are going to get plutonium byshifting to thorium reactors. Hope-fully, when we stabilize in the tho-rium route, our nuclear costs willstart dropping. It is very clear thatthe 123 Agreement does not guaran-tee fuel supply for foreign reactors.Every year, the US Congress is goingto review India’s behaviour andmany aspects of its foreign policyand various other things. And, if theyare happy, they will release the fuelfor another two years. It is going tocome in bits and pieces. And, at anypoint of time, if we do somethingthat they do not like, they wouldhave an option to stop the fuel sup-ply. That is one of the conditions ofthe Nuclear Deal.

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Once the fast breederreactor is constructed, weneed to test it at least for

four or five years tounderstand all its

nuances, makecorrections, and makesure that we have a

system that is completelyin place. Next, it has togo to a second type ofbreeder and only then,we can go for thoriumutilization. There is a

gestation period whichcannot be cut short.

Every year, the USCongress is going to

review India’s behaviourand many aspects of its

foreign policy and variousother things. And, if they

are happy, they willrelease the fuel for

another two years. It isgoing to come in bits andpieces. And, at any point

of time, if we dosomething that they do

not like, they would havean option to stop the fuelsupply. That is one of theconditions of the Nuclear

Deal.


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Another major question concerns reliability. We allsaw what happened in Bhopal— a foreign companyalmost got away after the accident in which thousandsof our people died. The foreign reactor manufacturerswho are coming into the country have already startedarguing that they want a liability-free environment toset up the reactors. That means they will come, sell thereactors, turn it on, and hand it over to the NuclearPower Corporation of India Limited (NCPL) and walkout if that reactor causes a major accident which can alsobe due to manufacture or design fault, but they will betotally absolved. That is what they want. And, the gov-ernment has not yet murmured anything and is in factalready in the process of modifying the Atomic EnergyAct of India to accommodate theforeign countries under these condi-tions. In the US, there is a PriceAnderson Act under which everycompany that sets up a nuclear powerplant in the US is liable for accidentswhich could happen during its life-time. They are held answerable. And,they have an Act under which $10billion will be immediately availableto the local communities for redemp-tion of whatever loss is faced. We have no such thing.These are some of the issues about which we need toworry.

Our regulatory framework needs to be strengthenedto build public confidence that safety of nuclear plantswould be taken care of while letting in private players.Our regulators who are supposed to look independentlyat the safety of these imported reactors are totallyunfamiliar with foreign reactors. So, in the first 10-15years, we will be in a very dangerous situation whereour own people would be trying to learn about thesereactors.

Today BHEL and L&T are supplying the nuclearcomponents. After a great deal of struggle, they haveestablished nuclear components manufacturing shop andcapabilities. After all, money is not in plenty. So, tomor-row if we start buying nuclear reactors from abroad, tothat extent, the Indian reactor programmes will slowdown because there won’t be enough money for thenuclear programme. If that happens, the Westinghouseshops will have 5,000-10,000 employees hired for sup-plying reactors to India. But the BHEL shop in Trichi,

Hyderabad, and Bhopal will be turning away and re-jecting people because they will not have nuclear jobsto do. So, this is also an externality and a hidden costwhich need to be taken into account. No one in thenational scene is talking about it, not even BHEL. Therehas to be international monitoring. The safeguards peoplewho come and inspect them do not come free of cost.Also, enormous amount is spent on protecting the Ameri-can assets that were bought by each country. All theseeventually add to the nuclear power cost. This moneywill not be paid for our own reactors or our own pro-gramme.

Nuclear terrorism is another concern as it couldaffect our reactors. The uppermosttarget of interest for terrorists wouldbe the foreign reactors, before target-ing the domestic ones. The plan is toput 4-5 reactors together in an is-land. They would require protectionfrom air attacks, attack from the sea,most of them being sea-shore sta-tions. Adding up all these essentialcosts would add to the cost of nucle-ar electricity. Considering the cumu-lative costs, ask yourself whether

there is really an urgency for rushing in for nuclearpower in the name of national security.

A N PrasadFormer DirectorBhabha Atomic Research Centre

As one who has dedicated the entire professionalcareer towards the development of nuclearenergy in the country and worked hands-on in

some of the most technologically complex and strategi-cally sensitive parts of the nuclear fuel cycle, I feel proudof the phenomenal achievements of the Indian nuclearestablishment during the last five decades, practicallystarting from scratch, inspite of being challenged to workin isolation under international embargoes and restric-tions in nuclear trade and cooperation for most of thisperiod. I wish some of these accomplishments had drawnthe attention of the media and the public at least afraction of the way the currently debated Indo-US Nu-clear Deal has caused awareness among almost all thesections of the society in the country and even beyond!

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Nuclear terrorism isanother concern as it

could affect our reactors.The uppermost target of

interest for terroristswould be the foreign

reactors, before targetingthe domestic ones.


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Let me put the Nuclear Deal insome perspective very briefly.

Ever since the non-proliferationtreaty (NPT) came into existence in1970 with India opting out ongrounds that it is a discriminatorytreaty, dividing the states into ‘haves’(nuclear weapons states) and ‘have-nots’ (non-nuclear weapon states),the US has been trying hard to useevery opportunity to somehowbring India into the mainstreamof global non-proliferation regime. Infact, this has become an obsessionwith them. Creation of the 45-mem-ber Nuclear Suppliers’ Group (NSG)led by the US in response to our 1974nuclear test is one such measure todeny us access to nuclear market and any formof cooperation with the outside world in the nuclearfield. Undaunted, India stood up to the challenge andwent on to develop a comprehensive capability notonly in building nuclear power plants but also weaponscapability. To cap it, India started building a prototypefast breeder reactor, an important step towardsthe utilization of abundant thorium reserves to meet ourlong-term objective of energy security.

Right from the word go, five decades ago, Dr. HomiBhabha, the founding father of India’s nuclearprogramme, realizing the country’s limited known re-serves of uranium and vast resources of thorium had,with great vision, postulated the well-known three-stageprogramme for achieving energy independence andsecurity. This was meant to be in place in the long runonce the conventional energy sources like coal get de-pleted. In fact, this programme has been theguiding principle for our systematicdevelopment. It is estimated that theknown uranium reserves whichcould generate a meager 10,000 MWof electricity, if properly managed asper the three-stage programme en-visaged, can generate in excess of350,000 MW of electricity by thoriumutilization. Of course, there have beenslip-ups in uranium exploration andmining which have become bottle-

necks for nuclear energy productionin the short term and thus need tobe urgently addressed on a war-foot-ing, politically as well as scientifical-ly. Though imports could, on the faceof it, appear attractive to get overshort-term interests, the implicationsof the strings attached to the long-term interests of our energy securityand independence need to be care-fully assessed.

There is no doubt in my mindthat India growing in strength tobecome a force to reckon with inthe nuclear field, far ahead of manyof the economically advanced coun-tries, has caught the eyes of the world.The world has realized that punitive

measures to restrict the determined India are not havingthe desired effect. In fact, in the various internationalmeetings I have attended, India is treated with respectas an advanced country in the nuclear field. It may bein this context that the US has taken the initiative toopen up cooperation with India. Inherent strength counts.

Looking at the joint statement issued by PresidentBush and Prime Minister Manmohan Singh on July 18,2005, one can see the respect with which India has beenaddressed. There was recognition of India as a respon-sible state, technologically advanced and deserving tobe treated at par with advanced countries like the US! Though there were some pin-pricks in the statement, thejoint statement as a whole was welcomed by us hopingthat there is at last a realization, though belated, of ourstrength and capability to play a global role as equalpartner in the advancement of nuclear science and tech-nology.

However, as the subsequent de-velopment of this historic initiativeunfolded, it is evident that all thesweet words are only restricted topaper, that too the initial joint state-ment. Inspite of India, with even thePrime Minister expressing concernsabout the change in goal posts, theUS has gone ahead and produced thevoluminous Henry Hyde Act speci-

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Ever since the non-proliferation treaty (NPT)came into existence in1970 with India opting

out on grounds that it isa discriminatory treaty,dividing the states into

‘haves’ (nuclear weaponsstates) and ‘have-nots’(non-nuclear weapon

states), the US has beentrying hard to use everyopportunity to somehow

bring India into themainstream of global

non-proliferation regime.

India is treated withrespect as an advancedcountry in the nuclearfield. It may be in thiscontext that the US hastaken the initiative to

open up cooperation withIndia. Inherent strength

counts.


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fically giving prescriptions as to howwe should behave if the bilateralcooperation has to survive spellingout repercussions if we decide tocross the lines they have drawn. Ashameful and demeaning treatmentmeted out to tarnish our pride andself respect.

As you go deep into the detailsof the Agreement, it becomes quiteclear that as far as the US is con-cerned, the Deal is more to meet atleast three objectives, viz., (1) bring India into the main-stream of global non-proliferation agenda by taking allpossible measures to cap and work for a roll-back ofits strategic programme; (2) exploit the Indian marketfor nuclear energy at the same time using its resourcesto revive their nuclear industry which is dormant sincethe late 1970s; and (3) make India a strategic partner inthis part of the world in line with their foreign policyobjectives. In essence, instead of being treated as anequal partner, India is made a client state subjected toperiodic assessment of good behaviour!

The above may seem to be a harsh assessment ofthe intentions of the Deal and the supporters includingour government may play it down by saying that theDeal will lift India out of isolation, help in ending nu-clear apartheid, gain access to global market, and ensureenergy security. All these claims are debatable. The 123Agreement, the text of which is a fine work ofcraftsmanship in drafting and camouflaging the coreissues by clever use of language is being touted as themain document governing the Deal belittling the HydeAct which has been formulated and passed as a legalUS national document with great care specifically to fixthe parameters of the Deal exclusive-ly for India. Essentially, what the 123document seems to ensure is, duringthe course of the operation of theDeal, India will be given ample op-portunities for consultations on anyissue of divergence with the finaldecision resting with the US sincetheir national laws are stringent andexplicit with India having no lever-age in the absence of any matchingnational laws. In fact, there is no pro-

vision for arbitration if there is dis-agreement!

Let me briefly touch upon someof the major concerns not adequate-ly addressed in the proposed Agree-ment.

There is a systematic attempt onthe part of the supporters of the Dealto underplay the significance of theconsequences if India were to con-duct a nuclear test in supreme na-tional interest. While there is noth-

ing in the Deal which legally prevents us from going infor a test if the situation so demands, the US law is veryclear that the Deal will be off and they reserve the right ofreturn of all materials and equipment supplied. Afterinvesting billions of dollars in importing reactors andbuilding huge infrastructure, which government in futurewill be able to take a decision in favour of tests and faceeconomic catastrophe? For all practical purposes, theoption of testing will be as good as dead and remainsonly in theory. There may be strong views being ex-pressed from influential quarters within the servingscientific community that weapon designs do not re-quire actual testing but could be done by computer simu-lation. How reliable such an untested device, its quality,yield and effectiveness as a deterrent will all be ques-tionable in view of the assumptions involved in compu-ter simulation data. Certainly, there will be a greatcompromise in maintaining truly effective deterrencewith fast changing global situation and in parti- cularin the region we are in with our neighbours having nosuch constraints. In fact, the US perhaps would not havetaken up this initiative of relaxing the nuclear cooper-ation norms if we had not conducted the tests in 1998.

One should not undermine strength.While testing is a political decision,it is unfair to make the scientists re-sponsible for producing an effective-ly deployable device without theoption of testing. Effective, credibledeterrence and testing are compli-mentary.

There is no unambiguous clar-ity in the Deal about the assurancesof supply of uranium while at thesame time our commitments are to

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What the 123 documentseems to ensure is, during

the course of theoperation of the Deal,

India will be given ampleopportunities for

consultations on any issueof divergence with the

final decision resting withthe US......

While there is nothing inthe Deal which legally

prevents us from going infor a test if the situationso demands, the US law

is very clear that the Dealwill be off and they

reserve the right of returnof all materials andequipment supplied.


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be in perpetuity regarding safeguards inspections. Infact, shortage of uranium being the main trigger for usto go into this Deal, this ought to be handled with greatcare. Our own experience in the past with the US onTarapur Agreement has been far from satisfactory. TheUS will try to keep us in tenterhooks on this issue andprevent us from building a strategic reserve. Even if weare allowed to stock, in case of trouble, they may invokethe right of return. This is a serious area of concernwhich is also to be tied up with the IAEA safeguardsagreement in terms of corrective measures we proposeto take in case of disruption.

Another area of concern is full civil nuclear coop-eration. Though this has not been qualified in the initialjoint statement of July 18, 2005, in all further documentsright up to the final version, this has been redefinedleaving out major portions of the complex parts of thefuel cycle such as uranium enrichment, spent fuel re-processing, and heavy water produc-tion stating that these are sensitivetechnologies. By this, it is not fullcivil nuclear cooperation on offer butonly a part which is of commercialinterest, namely, supply of powerreactors. We seem to be meekly sur-rendering to this serious change intheir stand without even protesting.Added to this, the 123 Agreementstipulates all sorts of conditions forreprocessing spent fuel of imported uranium origin whilenothing is on offer as far as reprocessing is concernedand that too after our having 40 years of experience inthis field. I see some deep-rooted motive in puttinghurdles on our reprocessing activity which is at the coreof our three-stage power programme. Here again, we arestill stuck with a bitter experience of stock-piling spentfuel from Tarapur reactors without any clearance fromthe US for reprocessing. The way the provision for re-processing is worded in the 123 Agreement, I suspecta trap to ultimately make the dedicated reprocessing wehave agreed to build as a multinational facility or forceit to come under international control.

If one were to take a holistic picture of the balancesheet of the plus and minus points, not all of which arequantifiable, the situation could be as follows. Therecould be respite in the short term in gaining access touranium to fuel the operating reactors and those under

construction, getting foreign investments in buildingadditional capacity in power generation though at amuch higher cost, and possible opportunity to interactwith global nuclear community in certain areas. On theflip side, by making us getting hooked on to the uraniumfuelled reactors, there could be less incentive to fund ina big way the fast breeder reactor programme for powergeneration quoting resource crunch, and slow down thethree-stage programme affecting long-term energy in-dependence using thorium making us external uranium-dependent.

The irony is that through this Deal, we are tryingto achieve energy independence by becoming dependenton uranium imports with all the implications for nation-al security! Though the percentage nuclear power con-tribution to the national power grid appears insignifi-cant at present, the technological base has advanced toan extent that should help in accelerating the pace of

generation in the years to come. Evenwith imports, the generation capa-city is not expected to increase sub-stantially. The need of the hour ispatience and staying on course toredouble our efforts to reach theultimate goal of thorium utilizationwhich alone can bring India realindependent energy security. Short-cuts like the one being contemplatedthrough this Deal could land

us neither here nor there and may leave us hanging.

Gopalan BalachandranVisiting FellowInstitute of Defence StudiesResearch FellowNational Maritime Foundation

After the last UPA-Left joint committee on theIndo-US Nuclear Deal that was held before thethen forthcoming State Assembly Elections in

Gujarat and Himachal Pradesh, it was speculated thatthe future course of the Nuclear Deal would be influ-enced by the results of these elections. Now that theresults are out, how does one view further progress inthe finalization of the Nuclear Deal that was announcedmore than two years back?

Press reports suggest that the Left has not modified

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The irony is that throughthis Deal, we are trying

to achieve energyindependence by

becoming dependent onuranium imports with all

the implications fornational security!


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its views and will continue to oppose the Deal notwith-standing any possible developments on the Indiannegotiations with the International Atomic EnergyAgency (IAEA) and the Nuclear Suppliers’ Group (NSG)and irrespective of the final outcome of these negotia-tions in addressing the Indian concerns on future civiliannuclear commerce. To that extent, the future course istotally dependent on the morale of the UPA Governmentand the Congress Party and its allies in the governmentand the firmness with which the Prime Minister assertsthe authority of the elected government to govern. Withthis simple but an extremely important caveat, how doesone evaluate further progress on the Deal?

First of all, with the passage of Hyde Act and theconclusion of the US-India Agreement for civil NuclearCooperation (the so-called 123 Agreement), the processthrough which India was to become a part of interna-tional civil nuclear trade, is no more a bilateral US-Indiaaffair. It is now a subject of discus-sion and negotiation between Indiaand two multilateral agencies—oneofficial and the other unofficial—theIAEA and the NSG. Except for thefact that the US is a permanentmember of the Board of Governorsof the IAEA and a leading and influ-ential member of the NSG, there isvery little need for any more formalbilateral discussion/negotiation be-tween India and the US on theNuclear Deal. The only formality thatneeds to be concluded by the US isfor the US Congress to agree to the 123 Agreement afterthe finalization of the IAEA safeguards agreement andthe amendment to the NSG Guidelines. Additionally, ofcourse, the US should concur with the approval of theIndia-IAEA safeguards agreement and the NSG Amend-ment to its Guidelines for Nuclear Transfers.

The next steps, after the amendment to the US lawsto allow for the US-India civil nuclear cooperation andthe successful conclusion of a bilateral US-India Agree-ment for such nuclear commerce—the so-called 123Agreement—are a number of actions to be taken byIndia, the IAEA, the NSG and finally the negotiation ofagreements—similar to the US-India 123 Agreement—between India and the other members of the NSG whoare interested in engaging in civil nuclear commercewith India. In terms of sequencing, the India-IAEA safe-

guards agreement has to be finalized first followed bythe amendment to the NSG Guidelines. Once these twoprocesses are over, then for all practical purposes, therelevance of the US for the operationalization of theNuclear Deal becomes almost negligible.

India is currently negotiating an India-specific IAEA-India safeguards agreement which will cover the civilnuclear facilities declared by India and one which willalso address India’s concerns about the security of nuclearfuel supplies in future for the safeguarded facilities. Itis possible, within the boundaries of the IAEA statutes,for IAEA and India to craft a safeguards agreement thatwill give a major role to the IAEA in providing nuclearfuel assurance for the safeguarded Indian facilities. Giventhe strong support extended to the Indo-US NuclearAgreement by the NPT nuclear weapon states, with theexception of China, and the support of the IAEA DirectorGeneral to the whole process, it is not difficult to draft

an India-specific IAEA safeguardsagreement that would satisfy theconcerns and requirements of allparties—the IAEA, the Governmentof India, and the members of theNSG. It is even possible that such arole for IAEA in fuel supply assur-ance for India can form the templatefor a more general fuel supply assur-ance role for IAEA in respect of othernuclear fuel importing states, a sub-ject which has caught the attentionof the IAEA and a number of coun-

tries with civilian nuclear programmes in recent years.

The conclusion of such a safeguards agreementshould, in turn, enable the NSG to modify its Guidelinesfor Nuclear Transfers in a manner that would satisfyboth its members and the Indian government. NSG de-cisions are taken by consensus. However, even thoughsome individual NSG members may not be wholly insupport of the Nuclear Deal, it is not expected that anyof these member countries would vote against an NSGAmendment. With the support of the major nuclearsupplier countries and the assistance of the US, France,and Russia, it is possible to get an NSG Amendment thatwould enable NSG members to continue to supply Indiawith nuclear fuel and facilities except in the case of amaterial breach of an international obligation by Indiaof its IAEA safeguard commitments.

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It is possible, within theboundaries of the IAEAstatutes, for IAEA and

India to craft a safeguardsagreement that will give amajor role to the IAEA in

providing nuclear fuelassurance for the

safeguarded Indianfacilities.


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With the NSG Amendment in place, India can thennegotiate individual “123” Agreements with other NSGmembers. Already a number of major suppliers of nuclearreactors and fuel have expressed a keen desire to enterinto such an agreement with India especially Russia andFrance. Other NSG members too, such as Australia andCanada, would want to enter the lucrative commercialmarket in India for nuclear power. It is, of course,necessary that in negotiating such an Agreement withany other country, India is assured that the Agreementdoes not impose any condition on fuel or facility supplythat is not part of that country’s civil nuclear cooperationwith any other similarly placed country. In short, fromthe point of view of the Indian government, taking intoaccount the various requirements it has enunciated inthe past, and the international community in respect ofthe non-proliferation aspects of the Nuclear Deal, thereis no major hurdle in the way of a successful conclusionof the whole process.

This is not to say, however, that there would notbe domestic pressures against theAgreement in either the US, India orelsewhere. The agitation and cam-paign against the Deal abroad wouldprimarily be confined to the US wherethe usual suspects in the nuclear fun-damentalist camp, the Ayatollahs ofnon-proliferation, can be expected tocontinue with their campaign againstthe Deal. Their objections, however,would not go beyond those that have already been madeduring the course of the passage of the Hyde Act andthe 123 Agreement, i.e., the Deal would assist India’snuclear programme; it would be a violation of the NPT;it would lead to proliferation, etc. However, with themassive support the Hyde Act enjoyed in both the Housesof the US Congress, such opposition is not expected tohave any impact on either the US administration or theCongress.

However, the campaign against the Deal in Indiawill in all likelihood continue unabated. The focus of thecriticism against the Deal has, however, undergonechanges over the period since its announcement. Initial-ly, the arguments against the Deal dealt with and fo-cused on the national security aspects of the Deal. Wouldthe Deal cap India’s strategic nuclear programme? WouldIndia have to agree to a moratorium on fissile material

production? Will it stunt India’s three-stage civil nuclearprogramme? How difficult will it be to separate the civilprogramme from the strategic programme? The critics’doubts were laid to rest following the announcement ofthe separation plan. It was established that the Deal willnot require India to halt or restrict any fissile materialproduction, it will not cap India’s strategic programmeand that it will not definitely impact the three-stageprogramme as at the second stage itself, the breederprogramme, was kept out of the civil list. The separationplan explicitly kept out of the civil list declared by Indiaall facilities that may have had even the remotest con-nection with India’s strategic programme. In short, theDeal will have no impact on the Indian strategic nuclearprogramme in any manner.

Following the announcement of the separation plan,the criticisms against the Deal shifted to the statementsmade by various personas in the US as the process ofamending the US laws went underway with congres-sional hearings. When the final amendment act, the

Hyde Act, was passed, the critics inIndia ignored the essential fact thatthe Act did not impose any conditionon India beyond those contained inthe July 15 Joint Statement and in-stead focused on those non-opera-tive clauses which had imposed onthe US executive some reporting re-quirements and which did not re-quire or involve the Indian govern-

ment in any manner whatsoever. This is not to say,however, that the Hyde Act, a long piece of legislation,did not contain many redundancies, articles and sectionsthat merely repeated sections of other US legislative actsor reiterations of well-known US policies.Nevertheless,the Act conformed in principle to thecontours expressed in the Joint Statement.

The focus of the critics of the Deal in India shiftedduring the US-India 123 negotiations. In particular, thecritics focused on a few elements of the Sec. 123 of theUS Atomic Energy Act, the issue of reprocessing of spentfuel from the US supplied nuclear fuel, and the possi-bility of obtaining sensitive nuclear technologies, i.e.,reprocessing and enrichment technologies. The stand-ard US 123 Agreement with NPT non-nuclear weaponstates was cited to warn of great dangers in the 123Agreement. In the final analysis, the 123 Agreement that

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The 123 Agreement thatwas negotiated betweenthe two countries wasquite unlike any 123

Agreement that the UShad negotiated with any

other country.


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was negotiated between the twocountries was quite unlike any 123Agreement that the US had negotia-ted with any other country. The twosides had managed to draft a 123Agreement that was in line with threemajor requirements: i) it should bein conformity with the US AtomicEnergy Act; (ii) it should not be inviolation of the Hyde Act; and (iii)it should address directly and in aconcrete fashion India’s concerns.Not surprisingly, given the uniquenature of the Agreement, it had cer-tain sections that could be interpret-ed in an ambiguous form. However,both the governments were satisfiedthat it fulfilled their individual con-cerns. The critics in India focused on some of theseambiguities which could, however, occur only in veryexceptional circumstances which most analysts consid-ered as extremely unlikely.

Realizing the ineffectiveness of their criticisms, thecritics in India have now introduced an element whichis of no relevance at all for the Nuclear Deal. That is theeconomics of nuclear power. Arguments have been madethat nuclear power is not cost-effective; India wouldbecome dependent on imported nuclear facilities andfuel, etc.

The economics of nuclear power does have rele-vance in India’s choice of energy sources in future. How-ever, no critic of the Nuclear Deal has established anylink between the Deal and the cost of nuclear power. Toput it bluntly, no one has even made a case, let aloneestablished such a link, that theNuclear Deal, whether operational-ized or not, would affect in anymanner whatsoever the economicsof nuclear power. Nor can anyonemake a case that nuclear powerwould be uneconomical under all cir-cumstances irrespective of the costsof other competing energy resourc-es, for example, even if the cost ofpetroleum oil goes to US $ 200 andbeyond. As common sense, not tospeak of some economic knowledge,

would indicate that the economics ofnuclear power would depend on therelative pricing of other fuels andthere is no link between the Deal andthe pricing on any fuel, nuclear ornon-nuclear.

What the deal does, however, isgive India the option, which it doesnot have now, of being able to im-port nuclear fuel and facilities ifnuclear power is seen to be compet-itive with other energy sources. Itdoes not in any manner whatsoeverrequire or force India to import suchfacilities or fuel if it considers nucle-ar power to be uneconomical.

To presume, therefore, that afuture government would engage in such imports is atbest to cast lack of intelligence on part of an electedIndian government and at worst to allege that only thecritics of the Deal have the Indian national securityinterests at heart and others have no competence, on thesubject. Given the composition of the critics, it wouldbe difficult to sustain the latter argument.

In a broader framework, the Deal would be seen infuture as a landmark Agreement befitting the role andimportance of the major supporters of the Agreement:US, India, Russia, France and others. For India, the Dealopens the option of enlarging the share of nuclear energyin India if that energy source remains competitive, andfor the international community, it brings India onceagain as one of the major players in international nuclearaffairs. It is not without significance that India has been

consistently a permanent member ofthe IAEA Board of Governors eversince its inception as one of the tencountries globally advanced in atom-ic energy and the only one such Boardmember who is not part of any of theother current international arrange-ments such as NSG, NPT, etc. ThisDeal will enable India to take itsrightful place in international nucle-ar diplomacy even though it maychoose to remain outside NPT andNSG.

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What the deal does,however, is give India theoption, which it does nothave now, of being able

to import nuclear fueland facilities if nuclear

power is seen to becompetitive with otherenergy sources. It does

not in any mannerwhatsoever require or

force India to import suchfacilities or fuel if it

considers nuclear powerto be uneconomical.

For India, the Deal opensthe option of enlarging

the share of nuclearenergy in India if thatenergy source remains

competitive, and for theinternational community,it brings India once again

as one of the majorplayers in international

nuclear affairs.


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The universal consensus, with few exceptions, isthat this Deal will correct a long-sustained injustice andis worthy of the prime proponents of the Deal: India andthe US.

Sitaram YechuryMPCPM PolitburoUPA-Left Nuclear Deal Steering Committee

In the context of the Indo-US Nuclear Deal, there haveoften been charges against us that our opposition tothis Deal comes and stems not actually from the Deal

per se but from certain extra-territorial loyalties or fromthe fact that we are anti-development. The first argu-ment that is posed is that it is required for our country’senergy augmentation. There is no doubt about the factthat the country needs to augment its energy. By 2020,we need to be very comfortable, and for this, we mayrequire at least five more deals, if not more. There is nodispute on this count. The disputethat we have is whether this is thebest and the most cost-effective wayto augment our energy resources. Theanswer to that question has beensought by experts from all quarters.

Let us begin with the proposi-tion of the Prime Minister. He saidthat we require 40,000 Megawatt ofnuclear energy by 2020. Out of that,we may obtain 10,000 Megawatt fromdomestic reactors which means that30,000 Megawatt of nuclear energywould be produced by the importedreactors. Now, what is the total costof nuclear energy per Megawatt produced by importedreactors including the cost of import, etc. A rough es-timate puts the figure around Rs 11 crore per Megawat.Thus, 30,000 Megawatt of nuclear power generationfrom imported nuclear reactors would mean a cost ofRs. 3,30,000 crore. Comparing this figure with the costof the best of thermal energy, the best of technologiesto control pollution, etc., per Megawatt, it will come toaround Rs 4 crore. There is no dearth of coal in India.According to the Planning Commission estimates, till2050, the major source of our energy production will becoal-based. So, there is no reason why we really haveto rely on nuclear energy. We can produce the same

30,000 Megawatts, using thermal energy at the cost ofRs 1,20,000 crore.

Looking at the other alternative of hydroelectricpower generation—there is no dearth of water in India.On the contrary, every year, hundreds and thousandsof crores of property is devastated and lakhs of peopledie because of floods. We can tap these water resources.Our national hydroelectric corporation tells us that wetoday utilize only 20 per cent of our potential for hy-droelectricity. Now, keeping all our environmental con-cerns in mind, the cost of one Megawatt of hydroelec-tricity would be Rs 3 crore. Thus the same 30,000Megawatt can be obtained in Rs 90,000 crore. Alterna-tively, if we consider gas, we now have a discovery ofa huge gas basin in Krishna Godavari. We are now talkingabout huge gas reserves on which the whole of the north-east is floating. We are talking of the gas supply fromIran. For this gas, again, we do not have to go anywhere.So the question that we are asking is not whether energy

augmentation is needed. We fullyagree that energy augmentation is amust, but the point that we want toemphasize is that energy augmenta-tion has to be achieved using ourown domestic resources, whichmeans all the multiplied effects, allthe downstream and upstream in-dustries that will follow, will bewithin India. With that Rs. 1,00,000crore, we can produce this 30,000Megawatt. Why then should we wantto spend Rs 3,30,000 crore for im-ported reactors? No answer has comeso far. Secondly, if this is true, thenby entering into this Deal and im-

porting reactors, what are we doing? The last order fora nuclear reactor in a US multinational corporation wasplaced about 30 years ago.

The US itself is not augmenting its energy throughnuclear sources because of the accident they had in thePacific Island. So, if this Deal takes place, a huge numberof orders will go to the US, allowing them to make profitswhile we would be saddled with these imported reac-tors. The first point is that nuclear energy being the bestalternative for energy augmentation is based on falsepremises. And the country cannot afford such high prices.Because what is the cost definition? It would be roughly

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According to the PlanningCommission estimates, till2050, the major source of

our energy productionwill be coal-based. So,there is no reason why

we really have to rely onnuclear energy. We can

produce the same 30,000Megawatt, using thermal

energy at the cost ofRs 1,20,000 crore.


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two and a half lakh of crores, if youtalk of rounded figures. It wouldmean enabling the opening of twoand a half lakh new Navodaya Vidy-alayas in which a 100-odd studentscan pass their class 12th with schol-arship with this money. It wouldmean fulfilling a dream that we havealways cherished—that every villagein our country will have a school.Instead why do you have to boost theprogress of General Electric ?

Alternatively, we can even usethe same money for our public hos-pitals and build 20,000 public hospitals of the higheststature like AIIMS with this extra differential. Thusinstead of spending crores on imported nuclear reactors,we can start 2.5 lakh Navodaya Vidyalayas or 20,000hospitals and provide quality education and health tocrores of people. Why deny that for this Deal when thealternative does not mean the loss of even a single Mega-watt of power? Therefore, the first question is: Whenwould be an appropriate time for us to make a switch-over to nuclear energy? We are not saying ‘No’ to nuclearenergy. Two generations down the line from now, theonly way to get these electric lights functioning wouldbe through nuclear energy because all other reserveswould have got exhausted. But the question is when doyou make the switchover and how. That is where thesecalculations are important.

The second point is the context of the Deal. The Dealcannot be seen in isolation. It is the product of the lastsix to seven years of constant interactions between Indiaand the US in what is called the strategic relationshipor strategic alliance between the twocountries. The foundation for thisDeal was actually laid out by theVajpayee Government in the courseof six years of its rule. And this ispart of a larger package. I can onlyquote the US Under-Secretary, Ni-chols Burns who said, “If you don’tdo it by the year end, it won’t hap-pen.” I just want to remind him thatwhen all the countries signed theCTBT, the US Congress rejected it.And then Bill Clinton said: “What

can I do?” If Bill Clinton can say that,why can’t we have the same right tosay that our Parliament did notapprove of it. We can let the Parlia-ment decide. But, this is a largerpackage which will put pressure onIndia’s foreign policy positions; therewill be pressure on India’s securityconcerns. The joint military exercis-es between the two countries wouldmake sense if both the countries havea common threat perception. Nowwhat is the common threat percep-tion between the US, Japan, Austral-ia, Singapore, and India? Who is such

a common enemy? What is this military expense allabout except drawing us into the US security strategy.And, this is where we have serious problems about Indiatoday.

Looking at the map, we are surrounded by whatHenry Kissinger once called the ‘Failed States.’ Startingfrom Bhutan, Nepal, Bangladesh, Myanmar to Sri Lanka,Pakistan, and Afghanistan—-in every single of thesecountries, there is a very deep instability and conflict.And, India’s future and betterment lies in the fact thatall these countries stabilize as proper democracies. Byjoining a US-led coalition with Japan and Australia, whatis the message that India is sending to all these neigh-bours? And, what is the message that we are sendingto China? Is it in our national interest? We believe thatthese sort of signals mean being a subordinate to the USand this will be detrimental to India’s position as acountry which has to play an important role in the worldorder. In the Rajya Sabha, in response to the nine points

that I had raised, the Prime Ministeranswered all the nine points and infact gave 12 assurances. But afterthat came the Hyde Act. Six monthslater, from the nine assurances thathe had given, three were not ful-filled. One is what is called theuninterrupted fuel supplies. They areimportant because if, for some rea-son, the 123 Agreement is terminat-ed and the US discontinues supplyof fuel, we would be stuck with theseimported reactors. It would lead to

Instead of spending croreson imported nuclear

reactors, we can start 2.5lakh Navodaya Vidyalayasor 20,000 hospitals and

provide quality educationand health to crores ofpeople. Why deny thatfor this Deal when the

alternative does not meanthe loss of even a single

Megawatt of power?

Two generations down theline from now, the onlyway to get these electriclights functioning would

be through nuclearenergy because all otherreserves would have got

exhausted. But thequestion is when do youmake the switchover and

how.


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the aim not being fulfilled.

Secondly, we will have completecivilian nuclear cooperation. The 123Agreement specifically says that asfar as reprocessing and enrichmentare concerned, these dual use tech-nologies are prohibited to be trans-ferred to India. So, where is thiscomplete scientific cooperation lead-ing us to?

The third objection is that with the IAEA, we enteredinto a perpetual safeguard agreement. And we are toldthat with this 123 Agreement, we are actually bringingIndia back into the non-proliferation regime. But nowwith the permanent safeguards that India will have, 90per cent of India’s reactors will be under IAEA safe-guards which means that even if the 123 Agreement isterminated and fuel is not supplied to us, in perpetuity,we are under the inspection of the IAEA. We are enteringinto these inspections in order to facilitate this 123 Agree-ment. If this breaks down, why should we continue withthat? Why should the IAEA and the government alwayscooperate?

So, what we are telling the Prime Minister and theGovernment is that apart from the final details whichthey will explain, it should be considered that unlessthese things are corrected and assured, this Deal is notin India’s favour even from the text point of view. Fromthe conflicts point of view, of course, it is not. And here,we have to draw attention of the whole world andourselves. The 123 Agreement exists between, let us say,the US and China and in case of a dispute between thesetwo countries, the law that would prevail to take careof the issue would be an international law. For India,in case of a dispute on any of these issues, the law thatwill finally prevail would be the US domestic law whichis the Hyde Act. If China has an international law thenwhy not for us? What does the 123Agreement in Japan say? That in caseof a dispute, an Arbitration Councilwill be set up to resolve the dispute,with one representative from Japan,one from the US, and a third onefrom a third country agreed upon byboth and the Chairperson of this Ar-bitration Council whose verdict is tobe accepted by both. If Japan has an

Arbitration Council and for China, itis as per an international law; forIndia, please tell us, why it shouldbe an US domestic law?

These are certain issues in theactual text that need to be properlyassessed before we proceed further.That is why we told the governmentto press the Pause button. We are nottelling them to Eject; we are not tell-

ing them to stop, but just to press the pause button. Letus consider this. Let the Parliament discuss it and thenwe would proceed with a clearer picture about the thingswe are not comfortable with at all. Even if China agreesto it, we will still oppose it on these counts. And second-ly, when would China and Pakistan gain? China and Pa-kistan would gain when there is a cap on India’s strate-gic programme because their strategic programmes cancontinue while we would cap ours. Now, who is cappingIndia’s strategic programme is a different matter. We areopposed to it; we are opposed to nuclear weapons inIndia or in the world; that is a different matter. But, thefact remains that this Deal caps India’s strategic pro-gramme. And therefore there is bound to be arguments.We have reactors; we will continue with that. But theDeal which effectively caps India’s strategic programmesis the one that gives relative advantage to both China andPakistan. So, it is those who are advocating this Deal areactually the ones helping China and Pakistan as opposedto those like us who are opposing it. And that is why Iappeal to all of you to reason things out.

C Uday BhaskarDeputy DirectorInstitute of Defence Studies & Analyses

The joint statement signed between the US Pre-sident George Bush and the Indian Prime Mi-

nister Manmohan Singh in Wash-ington DC on July 18, 2005 (J 1805)covered a wide spectrum of areaswherein the two countries couldbeneficially cooperate but the onestrand that has received continuousattention and incisive comment isthe one pertaining to the possibilityof civilian nuclear domain. This wasperhaps predictable, given the tec-

Through J 1805, Indiawould in effect not only

re-order its estrangedrelationship with the US

but the rest of thenuclear and hi-tech

world.

There are certain issuesin the actual text thatneed to be properlyassessed before we

proceed further. That iswhy we told the

government to press thePause button.


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tonic import of what was mooted bythe two leaders in the nuclear fieldand this is borne out when the entireissue is viewed contextually at threespatial levels, viz, global, bi-lateral,and domestic.

Over the last two and a halfyears, J 1805 has become a lightningrod for different constituencies in theUS, India, and the global communitythat is concerned with matters nucle-ar. Consequently, there has been aconsiderable churning of multipleinter-related and complex issues anda fair amount of heat, dust and somelight that has been generated. At onepoint in this period, it appeared as if the very survivalof the Congress-led UPA government was at stake dueto the ontological differences that were raised by theIndian Left parties over the desirability of proceedingwith J 1805 and having a closer relationship with the US.

However, that danger appears to have passed – forthe present – though the fall-out of the Gujarat electionswill have non-linear ramifications for the domesticpolitical matrix in India vis-à-vis J 1805. Incidentally, J1805 is, strictly speaking, a ‘jointstatement’ of grand intent as it were,and over the last 30 months, it hasmorphed into an Agreement – albeitpotential – and the discourse in themedia has further refined this intothe Indo-US ‘Nuke Deal’ – which itwill be if the letter and spirit of theJuly meeting is fully realized.

A brief review of the globalnuclear narrative since Hiroshima ofAugust 1945 and the post-Cold War,post 9-11 trajectory may better con-textualize the deeper import of J 1805and the cost-benefit analysis for thetwo principal interlocutors. Soonafter the US demonstrated its briefatomic hegemony, the former USSRalso acquired this distinctive strate-gic capability with its mass-destruc-tion characteristics by the mid-1950s,

thereby laying the foundation for bi-polarity that was the leit motif of theCold War. Within that decade, threemore nuclear weapon powers joinedthe so-called Club with China fol-lowing the UK and France.

Soon thereafter, the major pow-ers decided to retain this exclusivestatus and introduced the nuclearnon-proliferation treaty (NPT) thatsought to prevent other countriesfrom acquiring nuclear weapon sta-tus. India, directly affected by theChinese bomb, rejected the NPT forits discriminatory nature and re-mained steadfastly outside the re-

gime and championed the cause of universal disarma-ment and peaceful use of nuclear energy. Simultaneous-ly, India nurtured its modest nuclear infrastructure thatwas built around Homi Bhabha’s vision of a three-stageprogramme that would harness India’s vast thoriumreserves for nuclear energy.

A deep abhorrence for the apocalyptic nature of thenuclear weapon introduced an ambivalence in the In-dian response to determinedly acquire the nuclear

weapon notwithstanding the fact thatChina’s October 1964 nuclear test hadaltered the strategic balance in Bei-jing’s favour. But driven by a mix ofinsecurity impelled by a hostile glo-bal and regional ambience and latentnationalist fervor, India conductedwhat is termed a Peaceful NuclearExplosion (PNE) in May 1974. TheNuclear Club was aghast and angryand soon formed a closed cartel anda technology denial regime led bythe US that was specifically directedagainst India. Progressively, Indiabecame an outsider, an outcaste, anda pariah in a nuclear apartheid world.A defiant India became more andmore insular by way of its interfacewith the rest of the hi-tech andnuclear world.

With the end of the Cold War in

J 1805 is, strictlyspeaking, a ‘joint

statement’ of grand intentas it were, and over thelast 30 months, it has

morphed into anAgreement – albeitpotential – and the

discourse in the media hasfurther refined this into the

Indo-US ‘Nuke Deal’ –which it will be if the

letter and spirit of the Julymeeting is fully realized.

India, directly affected bythe Chinese bomb,

rejected the NPT for itsdiscriminatory nature and

remained steadfastlyoutside the regime and

championed the cause ofuniversal disarmamentand peaceful use of

nuclear energy.Simultaneously, Indianurtured its modest

nuclear infrastructure thatwas built around Homi

Bhabha’s vision of athree-stage programme

that would harness India’svast thorium reserves for

nuclear energy.


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December 1991, the Nuclear Club be-came more exclusive and both Franceand China formally joined the NPT.The dominant global communitysought to fetter India through twoother initiatives – the CTBT and theFMCT – the comprehensive test bantreaty and the fissile material cut-offtreaty respectively. Concurrently,China assisted Pakistan in its covertmissile and nuclear weapon pro-gramme that encouraged Islamabadto acquire a credible WMD profileand the attendant confidence to in-crease its strategy of terrorism andlow intensity conflict against India.

Consequently, Delhi was driven to review its pos-ture of nuclear ambivalence and after a tentative attemptby the then Prime Minister Narasimha Rao in December1995, India, under the BJP-led NDA Government, de-clared itself as a state with nuclear weapons in May 1998.(Pakistan followed suit soon after.) The Vajpayee gov-ernment sought to assuage global concerns by announc-ing a voluntary moratorium on further testing and a no-first-use policy. Yet, the global nuclear regime waschallenged and the US which spearheaded the prevail-ing non-proliferation drive sought to further ostracizeIndia – but in vain. By March 2000, the Clinton admin-istration came around to accepting the Indian decision– albeit reluctantly. India was still an outsider and theUS was still keen to ‘roll-back, cap and eliminate’ theIndian Nuclear Weapon Programme.

Post 9-11, the world had to acknowledge the natureof the new nuclear realities and at-tendant challenges in the 21st centurywhich encompassed deviant regimes,non-state entities, and the spread ofnuclear know-how and fissile mate-rial. The NPT as a regime was clearlyinadequate to address this new real-ity. The AQ Khan episode furtherexacerbated this opaque world. Thepotential of nuclear energy when theworld was seeking to address globalwarming by reducing the depend-ence on hydrocarbons even whilesustaining economic growth added

an urgency to global nuclear deli-berations.

It is against this complex andtangled backdrop that the Bushadministration reviewed the US nu-clear policies and decided to makea radical shift. India was to be ac-corded an exceptional status by ad-mitting it into the global nuclear fold.J 1805 was unveiled and its radicalscope took the principal interlocu-tors and the world by surprise. TheUS and India arrived at a modus vivendi by which India would beallowed to retain its modest nucleararsenal in return for placing 14 of its

22 reactors under international safeguards. To facilitatecooperation in the civilian nuclear and hi-tech sector, theUS agreed to amend its domestic laws that prohibitedsuch interaction, (hence the Hyde Act) and encouragethe other NSG members to accord India similar excep-tionalism. Thus, through J 1805, India would in effectnot only re-order its estranged relationship with the USbut the rest of the nuclear and hi-tech world. And fur-thermore, India would be able to access the global marketfor uranium ore – which is a scarce domestic resource– to advance its three-stage power programme, evenwhile husbanding its modest strategic arsenal.

Thus an objective cost-benefit analysis would sug-gest that India is getting the best possible ‘deal’ againstthe backdrop of prevailing global realities. Yes, India isaccepting certain conditions and some elements of theUS legislation that need to be reconciled but the big

picture is stark. Currently, Indiaremains isolated due to its peculiarnuclear status and it is paradoxicalthat when globalization andunfettered interaction across thepolitical, economic, and hi-tech tracksis the norm of the 21st century, Indiaalone among the major powers is an‘outsider.’ To the extent that theworld is moving towards a know-ledge economy and access to the glo-bal high and new technology domainis a desirable direction, India needsto position itself most favourably.

Post 9-11, the world hadto acknowledge the

nature of the new nuclearrealities and attendantchallenges in the 21st

century whichencompassed deviant

regimes, non-stateentities, and the spread of

nuclear know-how andfissile material. The NPTas a regime was clearly

inadequate to address thisnew reality.

Currently, India remainsisolated due to its

peculiar nuclear statusand it is paradoxical thatwhen globalization andunfettered interactionacross the political,

economic, and hi-techtracks is the norm of the21st century, India aloneamong the major powers

is an ‘outsider.’


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J 1805 allows for such a change inorientation, which in turn will per-mit a much greater harnessing ofIndia’s proven HR talents that are insync with the trajectory of the 21stcentury.

To predicate India’s long-termnational interests on a single exigen-cy – the unencumbered right to con-duct another nuclear test – is tocompletely miss the strategic contours of the future. Arare concatenation of circumstances in the US and Indiaallow for J 1805 to remove the fetters that have beenplaced on India for almost 32 years. Rejecting this dueto exaggerated anxieties and distorted interpretationsabout what such exceptionalism entails for India wouldbe indicative of imprudent and feckless management ofnational priorities.

Ritwick PriyaPGP-I StudentIndian Institute of Management, Ahmedabad

The Nuclear Deal with the US has disrupted publicdiscourse multiple times in the recent past. It isamazing how our public discourse is typically

filled with opinions flying left, right, and centre – opi-nions that each one of us fits with our own world views– and the proverbial scratch on the surface reveals thatnot much exists beneath the surface at all. ‘Too muchpunditry, too little analysis’ is a description that cha-racterizes the greater majority of our public debates,with even ‘informed’ analyses in reputed publicationstypically failing to connect all thedots.

There are broadly two axes alongwhich the Deal can be analysed—thefirst is energy economics and thesecond is strategy and foreign po-licy. I am convinced that the Deal isfavourable along both dimensions,but let us look at the issues one byone.

First, the relevant facts – theduration of the Deal is 40 years, andthe proposed energy transfer in theperiod is about an installed capacity

of 60,000 MW. Either party can ter-minate the Deal with a notice periodof 1 year in this interim 40-yearperiod, and with a notice period of6 months at the end of the Deal. Theobjective of the Deal is to “enable fullcivil nuclear cooperation with Indiacovering aspects of the associatednuclear fuel cycle.” The resultantbusiness is likely to be to the tuneof $150 billion, of which the lion’s

share is likely to go to the American nuclear powercompanies.

So, what are the implications for India’s energyscenario? To evaluate that, a look at our current positionis necessary. We currently have an installed peak capa-city of 160,000 MW, including captive generation sourc-es. This implies a peak shortfall of 11.7 per cent or about21.2 MW. (This is just the installed capacity, ignoringthe severe T&D losses). The Integrated Energy Policy(IEP) Report of the Expert Committee of the Governmentof India, dated 9th August 2006, shows that even thoughthe elasticity of per capita energy consumption per capitaof GDP growth has been falling over the years and isless than 1 now (meaning that if x% is the annual increasein energy demand and y% is the annual increase in GDP,then x<y), the energy needs per capita are still likely toincrease at a rate of 6-7 per cent p.a., averaged over thenext 25 years. It estimates that in 2031-32, we will needan installed capacity of 800,000 MW. Where is this 800,000MW going to come from? From “pursuing all possiblefuel options,” in the words of the Expert Committee. The800,000MW figure is inclusive of an estimated 63,000

MW of nuclear power, 150,000 MWof hydel power, and thermal powerincrease of 5.1 per cent p.a. India’suranium reserves are good enoughfor only about 10,000 MW, repre-senting the limiting value for ourPHWR reactors.

Opponents of the Deal have con-tinuously touted the figure of Rs.11 crore per MW, the estimated costsof the nuclear power generatedthrough imported fuel and reactors.This figure, they claim, is signifi-cantly higher than the Rs 7 crore per

To predicate India’s long-term national interests ona single exigency – theunencumbered right to

conduct another nucleartest – is to completely

miss the strategiccontours of the future.

The objective of the Dealis to “enable full civil

nuclear cooperation withIndia covering aspects of

the associated nuclearfuel cycle.” The resultantbusiness is likely to be ofthe tune of $150 billion,of which the lion’s share

is likely to go to theAmerican nuclear power

companies.


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MW for power from indigenousnuclear sources, Rs 4 crore per MWfor power from thermal sources, andthe even lesser cost per MW for hydelpower. These figures are a littletricky. It is fair, for example, to askwhy the relevant power figure forcomparison was taken as 30,000 MWand not 53,000 MW (estimated re-quirement minus indigenous re-sources). Ventures with higher fixedcosts (import of reactors, fuel etc.)become increasingly attractive forhigher volumes. The long run mar-ginal cost of producing 1 business unit (1 KWH) ofenergy through nuclear sources was estimated at aboutRe 1.00 for nuclear energy and about Re. 0.90 for thermalenergy, (at 1984 prices) in a paper by Prof Y K Alagh(1997). The comparison becomes favourable for nuclearpower when the distance to which coal has to be trans-ported exceeds a 1,000 Km, due to the high transpor-tation cost of coal.

According to the IEP Report, Indian uranium isextracted from the ore that has 0.1 per cent useful contentas opposed to the international standards of 12-13 percent. This makes indigenous nuclear fuel 2-3 times costlierthan the imported fuel. With all these figures, it seemshard to accept the cost considerations that have beendrawn for a capacity of 30,000 MW. The dissonance isfurther magnified by the fact that the IEP Report hassuggested that India change its en-ergy policy from “minimum initialcost purchase” to “minimum lifecycle cost purchase.”

However, let us for a momentassume that comparison to be abso-lutely correct. Does that changethings? Not really. The inherentassumption that we could use alter-native sources to generate the 30,000MW is itself flawed. The IEP Reportassumes 150,000 MW of hydel pow-er, which is 100 per cent of the knownhydel power potential of India. Italso assumes a constant growth of5.1 per cent p.a. for thermal power,which has been the current trend.

India needs those 30,000 MW ofnuclear power even after exploitingthese alternative options to their rea-sonable maximum. The scenario thatwe are looking at, thus, is not one ofhigh cost power vs. low cost power,but one of some power vs. no power.One is reminded of Homi Bhabha’ssuccinct remark that puts this sit-uation in its proper perspective –“No power is costlier than no pow-er.”

India’s mineable coal reservesare estimated to last another 45 years (at 5.1% growingusage p.a.) and the known oil reserves are likely to last23 years of production and 7 years of consumption. Withincreasing oil prices and depleting coal reserves all aroundthe world, there seems to be no way except to go fornuclear power. The IEP Report says that “Nuclear en-ergy theoretically offers India the most potent means tolong-term energy security.” It is true that energy securityhas to be achieved in the long term through indigenoussources, and that the indigenous thorium-based FBRprogramme is theoretically the best way to achievenuclear power security. However, to let go of the op-portunity of imported uranium-based power generationin the hope of an unmitigated success of the FBR pro-gramme would be extremely damaging in the mediumterm, and implies continuing peak load power capacityshortfalls.

Next, we move on to the strate-gic and foreign policy implications.The opponents of the Deal haveraised four main considerations onthis front, namely:

1) The Deal does not guaranteeassured nuclear fuel supply, and onlypromises to “seek to amend domes-tic laws” to ensure the same.

2) The Hyde Act is likely to provea major bug-bear, and the necessityof “congruence” of the Indian fo-reign policy with that of the US im-pinges upon our autonomy and willbe interpreted as strictly as possibleby the US.

India’s mineable coalreserves are estimated tolast another 45 years (at

5.1% growing usage p.a.)and the known oil

reserves are likely to last23 years of production

and 7 years ofconsumption. With

increasing oil prices anddepleting coal reserves allaround the world, there

seems to be no wayexcept to go for nuclear

power.

According to the IEPReport, Indian uranium is

extracted from the orethat has 0.1 per cent

useful content as opposedto the international

standards of 12-13 percent. This makes

indigenous nuclear fuel 2-3 times costlier than the

imported fuel.


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3) In the event of a unilateral termination of theAgreement by the US, we will be left with unusablenuclear reactors that will impose maintenance andsafety costs for no benefits at all.

4) IAEA safeguards will continue in perpetuity eventhough the Deal is terminable.

Let us deal with the last consideration first, becausethe first three are closely inter-linked. What exactly arethe IAEA safeguards that we have to adopt? Simply thatany reprocessing performed on the nuclear fuel import-ed through this Deal will be in a newly created repro-cessing facility that will be open for IAEA inspection(typically, these inspections are inventory checks of weap-ons-grade nuclear materials). Any reprocessing done inthis facility will be open for IAEA inspection. But dothese safeguards extend to all reproc-essing performed in India’s reactors?Not at all. It is perfectly possible forIndia to strike similar deals with otherNSG nations and reprocess the fuelobtained through those deals at sep-arate facilities with separate safe-guards. Even if the US is likely to putpressure on most NSG nations tohave similar safeguards, the optionof Russia remains perfectly tenable.

The first three considerationsbecome relevant only in the eventthat the US goes ahead with a uni-lateral termination of the Deal. Sincethe large US business houses are going to have a stakein the profits generated by the Deal, their pressure andlobbying is going to act as a deterrent to the possibilityof this scenario. More significantly, the information andtechnology transfer is going to aid India on the path ofcreation of indigenous reactors that can process highergrade uranium that can be imported from the non-USNSG countries. This acts as a genuine buffer to the shockof a unilateral termination.

Interestingly, this is what Article 5.6(b) of the Dealreads like:

• The US is willing to incorporate assurances regard-ing fuel supply which would be submitted to the

US Congress.

• The US will join India in seeking to negotiate withthe IAEA for India-specific fuel supply agreement.

• The US will support an Indian effort to develop astrategic reserve of nuclear fuel to guard against anydisruption of supply over the lifetime of India’sreactors.

• If, despite these arrangements, a disruption occurs,the US and India would jointly convene a group offriendly supplier countries to include countries suchas Russia, France, and the UK to pursue such mea-sures as would restore the fuel supply to India.

The language is ambiguous, but not by diplomaticstandards. Please find me another instance where India

has been able to negotiate a deal witha superior power with such majorconcessions. Is it at all possible forthe US to guarantee fuel supply incontravention of its domestic laws?Can the UPA, for example, promisethe US that the deal will definitelygo through?

And what about the Hyde Act?Without delving into legalese, theessence of the matter is that the Actis definitely restrictive, but fourprominent exemptions have beengranted to India. The first one wasthe exemption of the requirement of

IAEA fullscope safeguards. The second was an exemp-tion that made sure that India’s detonation of a nucleardevice after the passage of the Atomic Energy Act (1978)of the US does not hinder the Deal. The third waivedthe sanction on exports to India. The fourth exemptionensures that India’s unsafeguarded nuclear activitiesthat are independent of the nuclear transfers as part ofthe Deal cannot be invoked as a reason for termination.The Hyde Act remains an issue of contention, but seemslike one that has to be negotiated with, rather thansomething that can be made a reason to ditch the Deal.

The arguments in favour of the Deal are many, thedetractions few. It would be a great loss to India if theLeft succeeds in its attempts to stall the deal.

The information andtechnology transfer is

going to aid India on thepath of creation of

indigenous reactors thatcan process higher grade

uranium that can beimported from the non-USNSG countries. This acts

as a genuine buffer to theshock of a unilateral

termination.


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Chepuri KrishnaPGP-II StudentIndian Institute of Management,Ahmedabad

It is a commonly held misconception that Nuclear Deal is a pa-nacea for India’s burgeoning

energy deficit reduction and a meansto rejuvenate the supposedly ailingdomestic nuclear industry. The im-plementation of the Deal essentiallyallows India to secure uranium forconventional nuclear power genera-tion without any concomitant technology transfer. In-dia’s strategic three-stage programme which holds thereal promise for securing India’s long-term power needswill remain unaffected by the Agreement. We elaborateon these two points in what follows.

India currently has an installed capacity of 140,000MW, precluding captive generation capacity. Nuclearpower accounts for a minuscule 3 per cent of this in-stalled capacity. It, however, accounts for 16 per centof the worldwide installed capacity. In France, nuclearpower accounts for a whopping 75 per cent of the in-stalled capacity. India’s below average ratio can prima-rily be attributed to the nuclear fuel and technologyembargo in place since 1970. This has proved to be ablessing in disguise and has allowed the Indian estab-lishment to develop critical competencies along the entirenuclear value chain from fuel miningand fabrication, reactor design andconstruction, and waste manage-ment. The bottleneck in expandingnuclear capacity since then has beena lack of access to uranium from theNSG countries, not technology. TheNuclear Deal essentially serves toset that right by allowing us accessto uranium from the NSG countries.This will only marginally meet In-dia’s power requirements in the 2020period as the following simplisticcomputation shows.

Extrapolating the recent trendof 7-8 per cent annual increase in theinstalled generating capacity, we arelooking at an additional capacity of

200,000 MW that needs to be installedby 2020. Assuming that the NuclearDeal in its present form is imple-mented, an additional capacity of30,000 MW will be created fromforeign imported reactors and pur-chase of enriched uranium from theNSG countries. This will account fora mere 8 per cent of our annual powerconsumption needs in 2020. Furtherscaling up is not feasible and willdrive up fuel costs to make nuclearpower relatively more expensive. The8 per cent capacity shortfall, if the

Deal were not implemented, can be met in myriad ways.Further, power from imported reactors is bound to bemore expensive than that produced from the domesticones. It should be obvious that the Deal’s energy im-plications in the context of the Indian economy are notsignificant.

India’s long-term energy security is dependent onthe successful culmination of the three-stage fast breederreactor programme that allows India to harness its vastthorium reserves and increase nuclear power capacityin excess of 50,000 MW. The first stage of the programmeemploys the pressurized heavy water reactors (PHWRs)fuelled by natural uranium, and light water reactors, toproduce plutonium. In the second stage, fast neutronreactors burn the plutonium to breed U-233 from tho-

rium. Then in stage three, advancedheavy water reactors (AHWRs) uti-lize the mix to generate two-thirdsof the power from thorium. In 2002,the regulatory authority issued ap-proval to start construction of a 500MW prototype fast breeder reactorat Kalpakkam which is expected tobe operational in 2010. This will takeIndia’s ambitious thorium pro-gramme to stage two. Needless tosay, the success of the three-stageprogramme will drastically alternuclear economics and render irre-levant extant nuclear regime andconcomitant treaties. It is fairly clearthat our supreme national interestlies in focusing on this indigenousprogramme, which was conceived

India’s long-term energysecurity is dependent on

the successful culminationof the three-stage fast

breeder reactorprogramme that allowsIndia to harness its vast

thorium reserves andincrease nuclear powercapacity in excess of

50,000 MW.

The success of the three-stage programme will

drastically alter nucleareconomics and render

irrelevant extant nuclearregime and concomitanttreaties. It is fairly clearthat our supreme national

interest lies in focusingon this indigenous

programme, which wasconceived way back in

1958-59, keeping in mindour paucity of uraniumreserves and abundance

of thorium.


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way back in 1958-59, keeping in mind our paucity ofuranium reserves and abundance of thorium. It must bestressed that the Indo-US 123 will have no direct bearingon India’s indigenous programme. The imported fuel,under the terms deal, cannot be used for the three-stageprogramme. However, implementing the Deal may havean indirect deleterious bearing on this programme. TheDeal will allow the Westinghouses and GEs to set shopin India. The de facto privatization and investment inimported foreign reactors are bound to slow down thestrategic programme by consuming the scarce nationalresources (both human and financial). This aspect needsto be looked very closely into. The Nuclear Deal doesnot open up new vistas for technological collaborationnor does it bolster our indigenouslybuilt-up capabilities. It only allowsus to meet 5-8 per cent of our medi-um-term energy needs at a very highfinancial cost. Given this backgroundand the political implications of theHyde Act, the Deal’s real significancelies in the strengthening of the emerg-ing strategic relationship between theworld’s most powerful democracyand the world’s largest democracyand not in enhancing India’s energysecurity. Lord Palmerstone, the 18thcentury British statesman once fa-mously said “Nations have no permanent friends orallies, they only have permanent interests.” An energydeficit and rapidly growing India’s permanent interestlies in securing its long-term energy needs, and that issomething this Deal does not address.

CONCLUSION

Anil Gupta

Air Commodore Jasjit Singh, one of the foremostdefence analyst of our country defends the Dealconvincingly. He makes three arguments: (a)

The Deal would reduce, not enhance, the dependenceon the US for technology and fuel. Many countries arein line, whether Russia or France, willing to do businesswith India in this area as soon as the Deal is through;(b) The Indian options for nuclear test, if situation sodemands, are not foreclosed in the Deal though the testmay not be warranted even on other grounds; and (c)

The need for nuclear energy in the future is only goingto increase, not decrease, given the high oil prices, lackof good quality coal, and limited alternative options.The case for the Deal is strongly made.

Sreenivasan believes that the deal was a major dip-lomatic achievement conferring on India the status ofnuclear weapon state and at the same time, providingit a non-(nuclear) NPT (Non Proliferation Treaty) routefor gaining access to technologies and fuel. In his view,any negotiation can only lead to a compromise solution.The deal to him appears the best possible outcome.

Gopalakrishnan argues that indigenous capacity formaking turbines and power plants will seriously be

impaired if we went for large scaleimports. He feels that coal and hydrooptions are worth exploring further.Within nuclear energy, the thoriumconversion technologies have a fu-ture and India can develop the same,given some more time. The cost perMegawatt of nuclear energy is alsosaid to be much higher than othersources. He recommends investmentin indigenous capacity building re-lying on thorium of which we haveenough reserves. He does not sup-port the Deal.

Prasad recalls the foresight of Homi Bhabha whohad visualized the need for thorium- based energygeneration more than 50 years ago. Having spent hislife in developing technologies at Bhabha Atomic Re-search Centre, he makes a strong case almost echoingthe sentiments of Gopalakrishnan. He believes that ifscientists were given some more time and resources,India might become the pioneer in thorium-based nu-clear energy generation technology. India would thennot need the imports and in fact might become an exporterof this technology.

Balachandran makes an interesting point that hav-ing started negotiations with IAEA and NSG, the matteris no more bilateral in nature. He identifies the steps thatare to be taken after negotiations with IAEA and NSGfructify. There is a big uncertainty about the view ofthe Left parties to the agreement, notwithstanding theassurances that IAEA and NSG provide. He argues thatrelative economics of different sources of energy will

The Nuclear Deal doesnot open up new vistas

for technologicalcollaboration nor does itbolster our indigenouslybuilt-up capabilities. It

only allows us to meet 5-8 per cent of our

medium-term energyneeds at a very high

financial cost.


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have to be evaluated from several angles includingemerging scarcity, reliability and other considerations.He underlines the fact that India has been a member ofthe IAEA Board of Governors ever since its inceptionas one of the ten countries globally advanced in atomicenergy. It is the only member which is not part of NSGand NPT.

Sitaram Yechury, one of the most eloquent leadersof the CPI (M) which is stalling the Nuclear Deal nego-tiations at present, addresses political as well as tech-nical charges against their position upfront. He ac-knowledges the need to augment energy options forIndia. He disagrees with those who believe that theIndo-US Deal is the best alternative at the moment.While dealing with the coal-based energy option, hedoes not address the issue of domestic coal quality andthe fact that India imports a huge lotof coal from Australia, has still notfound a way of dealing with fly ashproduced by power plants and, ofcourse, the problem of carbon emis-sion. He considers hydro power asan area of future growth apart fromgas-based power stations. He makesan important point about the lack ofclarity in the Deal about uninterrupt-ed fuel supplies. It is a differentmatter that as noted by other sup-porters of the Deal, there could benon-US suppliers willing to providethe fuel. Should India continue tolet 90 per cent of its reactors be underIAEA safeguards if the 123 Deal wasscrapped. He also regrets that unlikethe US-China Deal, the Indo-US Deal would be governedby the Hyde Act of the US instead of the internationallaws. He has a point—when Japan Deal has a provisionfor Arbitration Council, and the China Deal has resortedto international law, why should the Indian Deal requiresubmission to the US domestic law? This is a question,which the defenders of the Deal have not answeredsatisfactorily.

Commodore Uday Bhaskar looks at the issue fromglobal, bilateral, and domestic levels. By placing only14 out of 22 reactors under international safeguard, Indiannuclear arsenal aspirations are being respected. Hesupports the Agreement.

Ritwick, a PGP I student, defends the Deal and

argues primarily on the relative cost of different sourcesof energy. He makes an interesting point about the cal-culation of the costs with different output estimates. Herefers to Article 5.6 (b) which provides considerableleeway for exploring the options of fuel supply throughRussia, France, and the UK, should a disruption fromthe US occur for any reason.

Krishna, a PGP II student, asserts that a mere 8 percent share of nuclear energy in 2020 is not good enoughto undertake such a Deal. He believes that power fromimported reactors is bound to be more expensive thanthe domestic ones but gives no reason for that. In fact,as Ritwick argued, the imported fuel would be less costlythan the domestic fuel, given much smaller quantity ofuseful content in the Indian ore.

Sreenivasan, Commodore Bhaskar and Balachan-dran support the deal on variousstrategic grounds including the de-fence considerations. They do notsay in so many words but imply thatrestrictions on dual use technologieshave affected our defence prepared-ness and this deal might provide away out for our scientists to pursuedomestic options. The import ispossible but not obligatory. If it isnot in our interest to generate powerat high cost, we don’t have to createfacilities for the purpose to thatextent.

On the whole, the debate hasprovided many issues to think aboutand many ideas to pursue further.

We still do not know as to how advanced our thorium-based nuclear energy generation programme is. Further,would not that programme get strengthened once we getout of the embargo on our purchases after our previousblast. Would this Deal indirectly strengthen our domes-tic capacities for thorium-based options or thwart itwould depend upon the foresight our planners wouldshow. There is a strong case for strengthening indig-enous capacities. A way out seems to be to have theDeal but not expand too much of nuclear power optionsthrough imported reactors. Instead, we could rely ondomestically made reactors while using imported fuelas long as our indigenous supplies do not get stabilized.This is an option that might satisfy both the sides in thecountry.

Would this Dealindirectly strengthen ourdomestic capacities for

thorium-based options orthwart it would dependupon the foresight ourplanners would show.

There is a strong case forstrengthening indigenouscapacities. A way out

seems to be to have theDeal but not expand toomuch of nuclear power

options through importedreactors.


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COLLOQUIUM Indo-US Nuclear Deal: A Debate

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