Civil Nuclear Cooperation with India - The Way Ahead

The article was published in the Indian Pugwash Society’s in-house newsletter Proliferation and Arms Control, Nov-Dec 2006, Vol III, No. 11, pp. 1-3. The article was published while I was Associate Fellow at the Society. 

With the “Henry Hyde United States–India Peaceful Atomic Energy Cooperation Act” receiving the Presidential assent, a significant milestone in the Indo-US civilian nuclear cooperation has been achieved. This is however, only the first of the three important steps that will follow before India can engage in civilian nuclear trade with the rest of the world.

The 123 Agreement

The first step involves the finalisation of a “123 agreement.” The reason why the agreement is called so because of section 123 of the US Atomic Energy Act (AEA)1954 that establishes an agreement for cooperation as a prerequisite for nuclear trade between the US and any other country.[i] Section 123 a (2) of the AEA 1954 states that “in the case of non-nuclear-weapon states, a requirement, as a condition of continued United States nuclear supply under the agreement for cooperation, that IAEA safeguards be maintained with respect to all nuclear materials in all peaceful nuclear activities within the territory of such state, under its jurisdiction, or carried out under its control anywhere.”[ii] In the case where the US is entering into nuclear cooperation with a country which has full scope safeguards, the agreement would come into effect within 90 days of its submission for congressional review unless a resolution of disapproval is passed in both Houses.

On the other hand nuclear cooperation with India would come into effect only if both Houses of Congress pass a joint resolution of approval within 90 days. If either chamber does not approve the resolution, the agreement does not enter into force. This is a much more difficult hurdle to cross as it would require concerted action on the part of the Bush administration. Given the changed composition of the Houses, this would be a much more difficult act to follow for the Bush administration. There is however a danger that both the US administration and the members of both the Houses would be aware of that is of the US energy companies being left behind in the race to capture the Indian nuclear market. The first mover would have a significant advantage over the late entrants and the Congress would not like to send out a negative message to the domestic lobby by dilly dallying on the issue.[iii]

Cognizant of this danger, the Bush administration had originally framed its legislation requiring a joint resolution of disapproval rather than a joint resolution of approval. This would have significantly reduced the leverage that the Congress would have had over the future of the nuclear agreement as in practice; it is very difficult to secure passage of such resolutions because a veto by the President of the joint resolution would require a two-thirds vote in both the Houses to override.[iv] However, both the Houses of the Congress rejected the administration’s approach saying that it did not provide for appropriate congressional oversight.[v]

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Indo-US Civil Nuclear Cooperation

This article was published in the IPCS website. It was written while I was Associate Fellow, Indian Pugwash Society, New Delhi.

With great power comes great responsibility; also comes the necessity for a country to engage in a cost-benefit analysis on any issue. With regard to the Indo-US civil nuclear cooperation, India has been prudently weighing its cost against the benefits accruing out of the cooperative arrangement.

The article published in IPCS website by Alex Stolar titled India at Crossroads: Next Steps in the Nuclear Deal correctly mentions that "India has been given once in a lifetime opportunity." India does need the nuclear fuel for the continuation of its civilian nuclear program and also does get acceptance as a de facto nuclear power as a result of the deal. But the cooperation also furthers US's strategic goals of finding a regional counterbalance to a rising China and of gaining an important ally on the Iran issue. Also, the Indo-US nuclear deal and the resultant nuclear trade have extended a lifeline to the American and other Western corporations whose fortunes were adversely affected ever since the West stopped commissioning new reactors. The recently completed feasibility report by the French company Aveva to set up six civilian nuclear plants in India, with each nuclear reactor costing over one billion Euros, is a case in point.

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The NSG’s Rio Plenary and the Indo-US nuclear agreement

The article was published in the Indian Pugwash Society's in-house newsletter Proliferation and Arms Control, Vol. 3, no. 7, July 2006, pp. 10-14.

The Plenary Session of the Nuclear Suppliers Group (NSG) that was held on 29 May 2006 in Rio de Janeiro is a crucial piece in the Indo-US nuclear deal that India and the United States are trying to piece together. The NSG’s acquiescence is crucial in order for the deal to materialise. However, each of the institutions is looking to the other player to make the first move. The NSG is looking for the US Congress to pass the required India-specific legislation before it makes a commitment. The US Congress wants that firstly, the two sides should iron out the differences that have arisen over the issue of future nuclear testing by India. And secondly, that India should move first and draw up safeguards agreements with the International Atomic Energy Commission (IAEA). The IAEA on its part wants the layout and designs of the civil-military separation to craft an India-specific inspection agreement.

The NSG Plenary was quite different from the earlier sessions held in March ’06 and October ’05, as for the first time the NSG members actually discussed the Indo-US nuclear deal unlike the March session at Vienna earlier this year where the nuclear deal was largely absent from discussions. The Rio Plenary was thus crucial for it gave both India and the US an opportunity to strengthen their position within the group and to garner more support for the deal.

The Indo-US combine did manage to do garner support from across the spectrum at the NSG meeting with only Sweden, Norway and Ireland being the three major hold outs. [1] Talking about the Rio session, the US ambassador to the IAEA, Gregory Schulte, who attended most of the confidential consultations, termed the Rio meeting as "an important step forward" in putting the deal in a broader strategic context. Though, emphasising that there was no deadline, he said, "We would like to have a decision sooner rather than later." [2] This is of immense importance because of the fact that the Group works by consensus and there are a lot of hard questions that the US will still have to answer from various member countries.

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US Sanctions Two Indian Firms: A Closer Look

This article was published in the Indian Pugwash Society's in-house journal Proliferation and Arms Control, Vol. 3, no. 3, March 2006, pp. 1-5.

As reported in The Washington Times and The New York Times the United States has recently imposed sanctions on nine firms worldwide, which includes two Indian firms under the Iran Nonproliferation Act 2000, for supplying chemicals that the US claims could assist Iran’s chemical weapons program. However, there is more to it than what meets the eye in the recent US decision [1].  The list of sanctioned companies includes six Chinese firms, two Indian firms and an Austrian Steyr-Mannlicher, which makes high-quality assault weapons. The sanctions have been imposed under section 3 of the Iran Nonproliferation Act, which Congress passed in 2000 to deter international support for Iran's nuclear, chemical and biological weapons programs and missile-delivery systems [2].  The sanctions run till December 2007 and bar the companies from doing business with the U.S. government and prohibit U.S. firms from obtaining export licenses to sell sensitive products to these companies. However, a closer look of this issue is warranted because not all the facts of the case match up. Especially, in the case of the Indian companies it seems as if the State Department could have its concerns misplaced.

The Facts of the Case
The two Indian companies that were sanctioned are Sabero Organic Chemicals Gujarat Ltd. and Sandhya Organic Chemicals Pvt. Ltd. The Federal Register does not mention any details about the materials that were transferred. However, things do look amiss when one gives a brief glance to the media reports as well as the press releases of the two Indian firms. The press releases put out by the two firms does list out the chemicals that were exported by them. Sandhya Organic Chemicals Pvt. Ltd. had exported approximately 1.5 MT of Phosphorus oxychloride – POCl3 and Sabero Organic Chemicals had exported 112 MT of Tri-Methyl Phosphite (TMP) in 2003 to Raja Shimi Industrial Manufacturing Centre, Iran. Both these chemicals come under the Schedule III of the Chemical Weapons Convention (CWC). [3]

Phosphorus oxychloride like Tri-Methyl Phosphite is a chemical weapons precursor. Both these chemicals find a mention under Section III of the CWC. This is mainly due to the widespread recognition of the fact that these chemicals have a lot of innocuous industrial uses. Apart from this even the Australia Group  [4] that follows the CWC classification places these chemicals under Schedule III. [5]

Interestingly, even under the US export classification system the two chemicals are listed under Schedule III. [6] This brings up the question of the rationale behind sanctioning the Indian companies in the first place. Why does the U.S. need to sanction two Indian firms for supplying material that they themselves do not see as dangerous? One question that needs to be asked is whether the US sanctions are a reflection of the paranoia surrounding Iran that exists in the United States.

Understanding the Iran Nonproliferation Act 2000

Given this information it is imperative that the Iran Nonproliferation Act 2000 be studied a little closer. It was on 14 March 2000 that President Clinton signed the Iran Nonproliferation Act of 2000, which authorizes him to take punitive action against individuals or organizations known to be providing material aid to weapons of mass destruction (WMD) programs in Iran. By appending his signature on the Act, President Clinton thus ended a two year long stand off with the U.S. Congress on the issue. Earlier, Clinton had vetoed a 1998 version of the bill that focused on missile proliferation to Iran because it required the imposition of sanctions on Russian entities unless the president determined that a waiver of sanctions was "essential" to U.S. national security. The administration argued that the legislation, the Iran Missile Proliferation Sanctions Act of 1998, would harm the administration's effort to garner Russian cooperation on a wide range of proliferation issues. [7]

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