Japanese Spanner in the wheel of Indo-US Nuclear Breakthrough

Issues Details: 
Vol 9 Issue 2 May - Jun 2015
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Analysing the practical obstacles that lie ahead despite the euphoria
Radhakrishna Rao
Saturday, May 23, 2015

They say there is a slip between the cup and the lip. And in the case of the much trumpeted Indo-US understanding on the civilian nuclear deal, this truism has proved to be an inescapable reality. Even as the January 25 announcement by the visiting US President Barrack Obama and Indian Prime Minister Narendra Modi over taking forward the seven year old Indo-US civilian nuclear deal also known as agreement 123 did raise hopes of ending India’s nuclear isolation, the Japanese objections in terms of data sharing and weapons testing could put a question mark on the entire deal which for the moment remains a “paper tiger”. Japan, which has faced a terrible nuclear catastrophe  by way of 2011 Fukushima nuclear power plant disaster is very clear that India  should sign the nuclear test ban treaty.  India is among the handful of countries that have refused to comply with both the Non Proliferation Treaty (NPT) and Comprehensive Test Ban Treaty (CTBT). Japan is also keen that India should part with nation specific data over nuclear materials like uranium, plutonium and other components which would account annually for every part of the nuclear chain. What is far more galling to India is that if the country were to break its self-imposed moratorium on weapons testing,Japan could insist upon the cancellation of the civil nuclear deal in toto. And as things stand now, any move to oblige Japan on these critical issues could prove politically dangerous for the ruling dispensation in New Delhi. By all means, the Japanese objections to the deal could mean a direct challenge to India’s national sovereignty including its “nuclear independence”.There is no denying the point that Narendra Modi led Government should tread cautiously while giving a practical shape to the deal. Of course, as noted by Teresita Schaffer of “South Asia Hand”, the Indo-US nuclear agreement is a “leap of faith” in terms of helping the two countries to explore the “unchartered territory in dealing with knotty issues”. 

India just cannot ignore Japanese objections. Because many US nuclear power plant manufacturers have tie ups with Japan based industrial behemoths like Mitsubishi and Toshiba, the objections   raised by Japanese Government couldhave a serious, negative impact on the Indo-US nuclear deal. For one, some of the critical components of US made nuclear plants are made available by Japanese companies. On another front, the US is a part of a close knit group at the Nuclear Suppliers Group (NSG) along with Japan and also Australia   whose nuclear deal with India is awaiting clearance from Australian Parliament.

Notwithstanding this breakthrough in Indo-US civil nuclear deal, nothing much has moved at the ground level. The only achievement so far seems to be the completion of the process of the routine exchange of letters in the form of signedtexts between the two countries for administrative arrangement for the nuclear deal. Administrative arrangement is a jargon referred to flagging and tracking of nuclear fuel and equipment. Whether the hope and optimism of the Indian Government that the deal aimed at ending India’s nuclear isolation would assume a practical shape will become a reality no one can hazard a guess at this point of time. In particular there is no clarity on the timeline for restoring the supply of fuel and spares to the foreign origin nuclear power plants in India that came under the sanction following the 1974 nuclear implosion by India.

Significantly, the Indo US civilian nuclear deal seen as a watershed in India-US relation with particular focus on strengthening international non-proliferation mechanism had its genesis  in the joint statement released by US President George Bush and Indian Prime Minister Manmohan Singh. Indeed for the successful passage of this agreement in the Indian Parliament, the United Progressive Alliance (UPA) Government led by Manmohan Singh had staked its very survival. The US Government on Oct 1, 2008 gave final approval to the agreement facilitating nuclear cooperation and trade between USA and India. At the time the agreement was signed, the pious hope was that it would end technology denial regime aimed at India’s nuclear power generation infrastructure. As such,the expectation was that the deal would open the doors for India to have civil nuclear cooperation as an equal partner with the USA and the rest of the world. The then UPA regime had described the entire exercise as a sort of magic wand with which to end India’s acute energy crisis. But seven years after this agreement nothing much seems to have changed for India. So much for the “hype and excitement” built around this deal.

At the end of the day what benefits would accrue to India from this deal --that has also subjected India’s nuclear independence to forces of pulls and pressures-- no one is sure as yet. That the US agreed not to impose another bilateral layer of inspections of the Indian nuclear power plants in addition to IAEA (International Atomic Energy Commission) is certainly a no consolation for the country. Indeed the failure of the Narendra Modi led Government claimed to represent “nationalist interest” in preventing the interference of IAEA into India’s nuclear power generation system is nothing but galling. In this context,  Bharat Karnad, Professor at the Centre for Policy Research in  New Delhi says,” The news that India had ratified the 1997 Additional Protocol permitting more intensive and intrusive inspections by IAEA of all aspects of the nuclear fuel cycle  and research including nuclear installations and facilities excluded by the Indian Government  from the safeguards regime came as a shock….IAEA is hence free to inspect  what it wants and when it wants  in order to get a comprehensive picture of India’s nuclear activity”.

 The geo strategic fall outs and international ramifications of the Indo-US nuclear deal  are really difficult to assess with certainty at this point of time. China which has warned India against walking into the well laid out US trap has expressed its willingness to “make concerted efforts with India to lift their strategic cooperative partnership oriented to peace and prosperity at a higher level”. Pakistan which also was keen on clinching a similar deal with the US has said that India and US struck the nuclear deal  out of ”political and economic expediency” that would have detrimental  impact on the  nuclear deterrence and overall stability in South Asia. Expressing concern over the deal, Sartaj Aziz, National Security and Foreign -Affairs Advisor to Pakistan’s Prime Minister said that Pakistan expects to see US play a constructive role for strategic stability and balance in South Asia.

In the ultimate analysis, the biggest concern is that whether US companies including GE and Westinghouse are ready to do business with India to push the Indian nuclear power generation capacity to 65,000- MW by 2022. This question assumes significance in the context of the consistent opposition of the US nuclear power plant suppliers to India’s stringent Nuclear Liability Damage Act of 2010.  Not surprisingly the cardinal issue is what arrangement will be made in the event of a nuclear disaster caused by the operator’s negligence or incompetence .Is there a mechanism in place to cover possible claims while disposing of nuclear waste or recycling fuel from the 21 existing operational civil nuclear power reactors and 22 more units with a capacity of 1000-MW each that are in the pipeline? The only thing that is clear so far is that Russia has agreed for picking up the “unlimited liability” tab in the event of a nuclear accident from the reactors that it has supplied for Kudamkulam nuclear power plant at the coastal stretch in the south Indian state Tamilnadu.

Of course on its part the Indian Government has said that it is planning to make public a large part of the document on the deal to serve as a “guide” for operators and suppliers to finalize the commercial agreement. The document will lay out the “understanding” reached  over the interpretation of section 17(b)  of the Civil Liability for  Nuclear Damages(CLND)Act 2010 which allows an operator to take the “right to re-course” from a supplier  and section 46 that says that nothing can prevent the operator from being sued from any other law. It will also cover other clauses like section 4, which spells out scenarios in which the operator is liable  for damage as well as section 6 that deals with cap on liability,

Sometime back, US ambassador to India  Richard Verma had said that it is upto private firms to take the nuclear deal forward. Verma drove home the point that the US companies keen on entering India’s nuclear power sector had to assess the fine print of the deal and make sure that they were comfortable with the “legal environment” binding under international treaties and practices. Ben Rhodes, US Deputy National Security Adviser

said- ”We have understanding as part of its ongoing engagement with companies so that people can have a clear understanding of that the way forward is”. Rhodes also underscored a core message encased in the notings of India’s Ministry of External Affairs(MEA) which implies that the US nuclear suppliers would have to undertake the risk assessment and “make their  own judgement” after taking a close look  at the insurance pool proposal and the legal  interpretation  offered by the New Delhi.

After India had enacted the stringent domestic nuclear liability law in 2010,the overseas suppliers of nuclear power plants had expressed concern over what they interpreted a sun limited financial burden under the legislation. With the objective of addressing this issue, India has now agreed to create an insurance pool with a corpus of Rs, 1500-crore to offset foreign suppliers’ financial burden. Some independent  commentators had alleged that the liability  may have been  entirely passed on to the operator thereby implying that the state owned Nuclear Power Corporation Ltd (NPCL), the only agency authorised to operate nuclear power generation system will be  bearing the brunt of any financial liability arising out of nuclear accidents. It is high time that the Government comes clean on the issue with particular reference to the responsibilities and liabilities of the nuclear power plant suppliers in terms of mishaps and accidents. Evidently, there is a lot of confusion and lack of clarity and apprehension about the Civil Liability for Nuclear Damage Act

 A spokesman of the External Affairs Ministry in New Delhi had pointed out that  no change to the CLND Act 2010 have been made and no assurance  given  to the US on its controversial section 46 that holds supplier to liability. But then how the Indian Government will convince US nuclear  power  plant manufacturers who are quite sceptical about the breakthrough  in the event of a legal or political opposition to the deal in India. The Indian Government considers the setting up of a nuclear pool with a corpus in excess of US$200-million as a sweetener to smoothen the implementation of the deal. And how the US quid pro quo to support India in its quest for the membership of the four elite clubs—Nuclear Suppliers Group (NSG), Missile Technology Control Regime (MTCR),Australian Group and Wassenaar Arrangement—would provide India a bargaining chip in strengthening its strategic independence, no one is sure as yet.

According to A. Gopalakrishnan, a former AERB (Atomic Energy Regulatory Board) Chairman, he is doubtful about the deal benefitting India. He is clear that it would ultimately burden the Indian tax payers given the cost of setting up the insurance pool estimated at around  US$240-million.  The observation of Gopalakrishnan is that “The financial burden of this will eventually be on the Indian tax payers. It is the foreign reactor manufacturer who escapes payment and the Indian public who suffer from the damaging consequences and end up paying the enormous cost of a nuclear power plant mishap.” Further, Gopalakrishnan is clear that “years of efforts of the India scientists would go waste if the country decides to rely on imports of nuclear technology. And the country will have to depend on them for reprocessing and enrichment of the fuel. And what if they deny us he fuel”.  Indeed the observation of Gopalakrishnan succinctly sums up the negative features of the much acclaimed Indo-US civilian nuclear deal.

 Meanwhile,India’s insurance regulator IRDA (Insurance Regulatory and Development Authority)  has given in principle approval for the  setting up of a Rs.1500-crore  nuclear liability pool for providing risk cover for nuclear reactors “We have given  in principle  approval for the setting up of nuclear liability pool with a corpus of Rs,1500-crore”And does this imply that at the end of the day,Indian public will be forced to bear the cost of any possible nuclear accident involving a power plant supplied by an overseas company. This is an issue that the Narendra Modi Government should make clear before any commercial deal takes place pursuant to the Indo-US nuclear agreement.