US nuke deal: unfolding future events

At the India-Japan symposium in Tokyo on Friday last, the outlook on the India-US nuclear power agreement ranged between cautious and negative. This annual conference of the ministry of foreign affairs in Japan?an attempt to bring opinion makers, business and academics together?was worried over the perceived dilution of the NPT, and the consequences for North Korea and China, immediate neighbours. Some element of cheer was restored only when it was pointed out that Japanese companies could have an opportunity for supplying equipment and parts, as they are indeed doing for nuclear power plants all over the world.

Caution tinged with some anxiety is perhaps the reaction in several countries, except in India and in the US administration, where it is absolutely bullish. From the US point of view, there are gains of a measure of control over India?s nuclear programme, an access to Indian markets, civil and military, of around $30 billion, and a strengthening of India as a strategic partner.

For India, the end of technological isolation, better prospects for energy self-sufficiency and the recognition of being an international player, are major gains in themselves. The opportunities for trade, and the greater number of H1B visas are additional benefits?the icing on the cake. All this is clear. Clear also is the cautious view: that India has compromised on having full control over its nuclear programme, that US will not be able to successfully perform a balancing act with Pakistan to India?s satisfaction, and that, unwittingly, India could be used by the US for a ?containment game? with China. All this is over, and is prologue.

Of greater interest would be the unfolding of future events. In the US Congress, President Bush needs to push this deal through. The legislative ploy that has been quickly adopted, of placing the proposed legislative changes on the table of the

House, and forcing Congress to come up with an amended draft, if any, within 90 days, is not a much used one. The expectation is that within this time, Congress would not be able to put together and vote on any agreed variation, and hence, this could expedite approval of the agreement. President Bush could also be banking on the need for his Republican supporters in Congress to give him a victory, given that he has ceded to them recently in the Dubai-P&O deal. For the present, the game is in the other half, and India can only wait, and ensure that it does not provoke any needless controversy. Informed opinion building in the US, handled with finesse, would be of advantage, and the mission in Washington would surely be at it.

What then?if the move succeeds, or if it fails? If it succeeds, we need to get our act together on the requirements. China has tendered out for 50,000 mw of nuclear power, and the design parameters being evolved are China?s standards, reported to be the best conceived. Possibly, Japanese firms may be involved in fabricating and supply. We need to be ready with locations, infrastructure, as well as plant designs, unless it is going to be an approach of merely buying offered equipment.

There is also the need to carry the diplomatic initiative forward to the other members of the Nuclear Suppliers Group and to get their acquiescence. A lot of ground work should have started, and it is not clear if it has. For example, could the private sector be involved or are only existing state-owned organisations to benefit? Is there need to sort out turf between the power and atomic energy departments?

If it fails in Congress, what then? There is, of course, the option of shopping around for plants from the other NSG countries, which would be quite willing to help. It is possible that China would obstruct this. For the others, it would depend on how the Indian nuclear power market could be divided up. Again, this requires development of capabilities to determine the technology and plants that are needed, and detailed project proposals and management. Time, again, to start this exercise.

There are other areas where the Indian response is not yet clear. China has already offered Pakistan eight nuclear reactors. Pakistan?s search for similar benefits from other quarters could only accelerate. The hardening of the Chinese stance has been witnessed at the recently concluded border talks in Kerala last week. It is not clear that the MEA has a well-thought strategy to counter these. It is also important to engage and to deal with concerns of our friends in Southeast Asia, Japan and the like, and not brush these aside as of little consequence.

There is a great deal hanging in the balance for India and, therefore, no effort should be spared to ensure this does not fall through. Apart from all the geopolitical considerations, we need the energy. This deal enables the development of nuclear power to become a reality, and provides an opportunity of going ahead massively for this option. This would enable us to catch up for lost time and provide energy security. India should be looking at 50,000 mw of nuclear power in a decade, with work on all starting simultaneously. The departments involved are not those known for speedy implementation, and structural changes would have to be factored in. There is a strong argument for taking fresh nuclear power generation locations out of the control of the department of atomic energy and bringing in private-public partnerships as well.

In the 60s, the US and India came very close, only to drift far apart. A new opportunity has occurred, and it is important for both countries to take advantage of this.

?The writer is a former finance secretary and economic advisor to the PM