Wednesday, July 16, 2008

Nuclear deal: why America is proactive to ‘help’ India

The Bush administration is visibly working overtime to finalize the nuclear deal with India. There are many indications that president George Bush is personally pursuing the deal to get it pass in the September session of the US Congress. However, there are different voices within the US administration about how much America will benefit from it. There is also the non-proliferation lobby constantly campaigning against the deal. The Bush administration is arguing that the deal will be a foundation of closed strategic relationship with a democratic and ‘economically vibrant’ friendly country that significantly shares its border with China.

Non-proliferation groups are saying that the deal would ruin global efforts to stop the spread of atomic weapons and boost India’s nuclear arsenal. Democratic Representative of Massachusetts Ed Markey, a leading critic of the deal, said that the Bush administration is pressuring the International Atomic Energy Agency (IAEA) and Nuclear Suppliers Group (NSG) for quick approval of the deal, which will compromise the integrity of the review process of the deal’s non-proliferation implications.

‘The Economist’ in its 23 August 2007 issue raised alarm on the Bush administration’s readiness, “Among other dangerous loopholes, some of which have widened since Congress gave its conditional go-ahead to the deal in December, India is pointedly not taking on the obligations and practices of the official five. Unlike them, it has refused to sign the test-ban treaty. Unlike them, it declines to end the production of fissile material—uranium and plutonium—for bombs.” It also says, “China, unhappy at America’s coddling of India, is exploring more nuclear cooperation with Pakistan—which in turn threatens to match India, should it step up weapons production or test again.”

The critics say that contrary to the claims of its advocates, the deal fails to bring India further into conformity with the nonproliferation behavior expected of the member states of the nuclear Non-Proliferation Treaty (NPT). Unlike 178 other countries, India has not signed the Comprehensive Test Ban Treaty (CTBT).

Then why is the US so eagerly interested? There are two primary reasons.

The business economics of the nuclear deal

American economy in general is looking for greater business opportunities in the ‘liberalized’ Indian economy of today. International Monetary Fund (IMF) has projected a slow economic growth rate for the US economy which is expected to register a growth rate of only 0.5% in 2008, compared to a strong growth rate in India, forecasted to be above 8%. India is one of the fastest growing economies of the world. As the American economy is moving slowly, countries like China and India provides fertile territory for US, the largest economy in the world to invest for high returns. The free market economy is therefore demanding more liberalized procedures in India and any obstacle in this regard is considered negative to the free market notion. Creating a favorable political atmosphere is therefore a necessity in this context. It is understandable why Dr. Manmohan Singh, the ‘chief architect’ of ‘liberalized’ India, a former IMF man, is so dear to Mr. Bush.

The strategic relationship between Delhi and Washington after the Indo-US nuclear deal will result big business for US nuclear suppliers, which would be around $150 billion worth of contracts according to estimates from the U.S.-India Business Council (USIBC). US nuclear companies will be able to sell both reactors as well as nuclear technology to India. The nuclear industry in the US presently is going through a stagnant phase as no new commercial nuclear reactor had come up in the past ten years. For one of the largest nuclear industries in the world, this situation is definitely grave. Therefore, if the Indo-US nuclear deal gets through it will have a stimulating effect on the US nuclear industry, which is expected to gain substantially from the emerging Indian nuclear market. Sensing this money-spinning option, the US nuclear business lobby is applying all their influences and contacts to get a smooth passage for the deal. In 2006, two US business delegations visited India looking to sell Westinghouse nuclear reactors and uranium from South Dakota. In the next year when the largest ever US business delegation visited India, 50 out of 250 delegates among them were nuclear manufacturers. As stated by a Bloomberg News report, “Areva, the world's largest maker of nuclear power stations, and General Electric, are among four companies poised to share $14 billion of orders from India.”

There are interests extended by big Indian companies also. According to the Tata Group chairman Ratan Tata, Tata Power is certainly interested in operating a nuclear power plant. Other interested parties are the Anil Ambani-controlled Reliance Energy (Anil Ambani is very close to Samajwadi Party’s Amar Singh who has made a volte-face to announce support for the Manmohan Singh government after the Left withdrew support), the Essar Group and the GMR Group. Anil Kakodkar, the Atomic Energy Commission chairman has already made the Indian government’s plan clear when in 2007 he said that the Atomic Energy Act would be amended very soon to allow private-sector participation. There are also contender companies eagerly interested to provide local support as contractors to US companies for setting up nuclear plants in India. Just look at the following list:

(a) In civil construction: Larsen & Toubro (L&T), Hindustan Construction Company (HCC) and Gammon India;

(b) In boilers: L&T in reactors; Bharat Heavy Engineering Ltd (BHEL);

(c) In boiler feed pumps: KSB, Kirloskar Brothers, Mather & Platt, Jyoti Ltd. and Bharat Pumps;

(d) In heat exchangers: Alpha Laval, GEI Hammon Pipes, Maharashtra Seamless and Ratnamani Metals;

(e) In panels: Honeywell Automation;

(f) In consulting and engineering services: Rolta India.

American hegemony and the nuclear deal

By building a close strategic tie-up with India, Washington will firmly position itself into the heart of the Asian subcontinent. All neighboring countries will soon start sensing the American hegemony from close. Then there are the significant advantages in a perpetuated future conflict by geographically positioning closer to China. India will be more valuable as a friendly nuclear state in this scenario. Washington is continually trying to influence New Delhi to tune its foreign policy with US global strategies; the nuclear deal will work as a wonderful catalyst in this respect. The added advantage will be that in near future the US could greatly increase their influence on economic policies of the Indian government as well. US military’s immediate goal is to start a constructive military cooperation program hosted from Indian soil, jointly with its allies, involving India. The Chinese newspaper ‘People’s Daily’ commented that, “In fact the purpose of the US to sign civilian nuclear energy cooperation with India is to enclose India into its global partners’ camp, so as to balance the forces of Asia.” In September 2005, the Indian Government had displayed its loyalty by voting twice against Iran in the IAEA after the US asked them to do so. Senator Luger of the Senate Foreign Relations Committee praised India’s initiative by stating, “We have already seen strategic benefits from our improving relations with India. India’s votes at the IAEA on the Iran issue last September and this past February demonstrate that New Delhi is able and willing to adjust its traditional foreign policies and play a constructive role on international issues.”

India and the US had already signed a ten year agreement ‘New Framework for India-US Defense Relationship’ earlier on June 2005 where various military issues like joint military exercises, joint planning, joint operations in other countries, and defense procurement between the two countries have been included. It seems likely that the civilian nuclear cooperation pact comes in exchange with this defense agreement. The agreement started rolling with the joint military exercises between the two countries in the Kalaikunda air base in West Bengal. Another agreement called “The Logistics and Service Agreement” will allow refueling and complete access facilities to all US ships and aircraft in Indian waterfront.

Strategic partnership between the two countries would be favorable to counteract China’s strategic capabilities and ‘Chinese hegemony’ in the South Asia region. Ms. Condoleezza Rice had earlier made it clear when she affirmed the strategic partnership as, “a platform of partnerships that will enable America to advance its interests and its values in this dynamic region for years to come.” There is another important aspect — the India-Pakistan relations. As M.K. Bhadrakumar in a recent article has noted,

“From Washington’s perspective, harmonising India-Pakistan relations makes the U.S. the predominant power in South Asia. It has serious implications for Asian security as well as for the Persian Gulf and Central Asia. The fallout on Afghanistan can only be helpful. The U.S. diplomacy will become optimal. It makes a fine legacy.”

Here also, money matters has influenced heavily. An estimate shows that India will spend $70 billion in defense procurements in the next five years. India’s long-term purchase plans are highly attractive to the US defense industries. It is not without cause that companies like Boeing were found lobbying the US Congress to smoothen the nuclear deal path. If the deal rolls, Government of India could be influenced further for US defense contracts to push back Russia, who is India's biggest defense supplier today. In future, India may also start launching satellites carrying U.S. components. India has already entered in the business of space launches and satellite fabrication. The availability of high-skilled talent at a lower cost may reduce 30 percent costs of the US space launch programs.


The civilian nuclear cooperation agreement will have a huge overall effect on the economic, political and social life of the country and its people and therefore ought to be studied and analyzed from all possible angles. It is a perilous agreement with hidden dangers which the Left parties tried to explore and explain to the entire nation — not as anti-Americans but as true patriots. The nation is more interested to follow the scrumptious daily developments of political vulgarism and sadly, dedicated to defend the great Prime Minister for holding the nation’s status to an ‘all time high' without knowing the full truth.

Cartoon by Michel Kichka / Courtesy: