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]