Is The Indo-US Nuclear Deal About To Get A New Lease Of Life?

In a series of recent high-level meetings, India and the US have launched renewed efforts to infuse a new lease of life into the historic Indo-US nuclear deal brokered by then-US President George Bush and Indian Prime Minister Manmohan Singh in May 2005.

Ending India’s three-decade-long isolation from the global nuclear order, the nuclear deal enabled New Delhi to resume international civil nuclear energy cooperation. More importantly, the deal paved the way for the US and India to forge a robust strategic partnership, resulting in the two countries signing key defence cooperation agreements and contracts over the past decade.

The civil nuclear commerce envisaged under the deal nevertheless failed to take off, and, barring Russia’s honourable exception, India could not conclude reactor supply contracts with either the US or France owing to various institutional hurdles. Diplomatic efforts between India and the US failed to bear much fruit in completing the reactor sale.

Announcements made during Prime Minister Narendra Modi’s recent visits to France and the US have once again raised hopes that the nuclear deal may finally become fully operational. At the same time, it has also drawn attention to various issues that allegedly obstructed the progress of civil nuclear commerce in the past.

These include concerns over high electricity tariffs from imported reactors and suppliers’ liability specified in India’s Civil Nuclear Liability for Nuclear Damage (CLND) Act passed by the Indian parliament in September 2010. While the tariff is a proprietary issue between concerned entities, the Indian finance minister’s announcement during her budget speech last month that the CLND Act would be amended has drawn attention as the ruling Bharatiya Janata Party (BJP) was among the opposition parties that endorsed the suppliers’ liability provision in 2010.

Since India had categorically ruled out the possibility of amending the CLND Act in 2015, it is crucial to note the government’s changing stance on nuclear liability. The BJP enjoys a full majority in both houses of parliament and faces no particular difficulty in passing the amendment.

The government’s nuclear liability volte-face may be driven by the need to reinforce strategic ties with Washington and Paris in an increasingly unpredictable global environment.

At the time of its signing, the nuclear deal stoked a major controversy as the US made an exception for India by modifying its domestic Atomic Energy Act of 1955. Moreover, the US exerted considerable diplomatic pressure to revise the Nuclear Suppliers Group’s guidelines to allow New Delhi to access reactor technologies and uranium from the international market.

On its part, India was to “assume the same responsibilities and practices” as the five original nuclear-weapon states – USA, USSR, UK, France and China. This implied, among other things, that India legislated civil nuclear liability regulations aligned with global standards. The principle of no-fault liability enshrined in the Convention on Supplementary Compensation, which is overseen by the International Atomic Energy Agency, provides for operators of nuclear installations to bear the responsibility for paying damages in the event of a nuclear incident.

However, the CLND act deviated from such established standards as it granted the nuclear operators a ‘right of recourse’ against suppliers in case of damages. At the time of its enactment, the opposition groups demanded the inclusion of the operator’s right of recourse in the CLND Act, citing the Bhopal Gas Disaster case, where no legal action could be initiated against Union Carbide, a US firm that built the plant.

As the right of recourse clause expectedly spooked the nuclear industry, the Indian government sought to assuage its concerns by instituting the Indian Nuclear Insurance Pool to cover liability risks. The international actors have nevertheless been voicing concerns over suppliers’ liability in the CLND act, which underlines their vulnerability to liability suits.

Historically, international law has afforded financial protection to the nuclear industry against damages. Protecting the industry from legal suits and channeling liability solely to the local operators of nuclear installations has been crucial to promoting atomic energy and, in turn, institutionalising the global nuclear order. Any change in this scheme, as occurred in the CLND act, would mean a deviation from the international standards and imperilment of the atomic energy industry.

Wedged between its experience of handling compensation claims during the Bhopal disaster and the need to align its civil nuclear liability law with international norms, India confronts an intractable tussle between imperatives of order and justice in nuclear politics. Mitigating this would require trading cautiously with foreign suppliers. Moreover, the amendment of the CLND act alone will not be sufficient to conclude international contracts as there is little clarity so far on tariffs, which play a crucial part in such negotiations.

Given such uncertainties, Indo-US civil nuclear energy cooperation should consider both past lessons and future directions. The US and India share a long history of collaboration in civil nuclear energy. India was among the first developing countries to welcome President DD Eisenhower’s “Atoms for Peace” initiative, which was announced in December 1953. India was also the first in the developing world to have two US-designed boiling water reactors built at Tarapur in 1963, which marked a high point in Indo-US relations during the Cold War.

As part of the Atoms for Peace initiative, the US aggressively promoted nuclear power as a modern energy resource to the developing world. Over time, however, the world has witnessed various downsides of nuclear power, ranging from concerns over nuclear safety and radioactive waste to the high per-unit cost. It is time, therefore, to move beyond atomic energy’s Cold War context and de-colonise energy security approaches.

India and the US, in this context, should consciously map future directions through a new-age clean energy deal. Assuaging the concerns of US or French nuclear firms to boost India’s nuclear energy sector is hardly a panacea for the country’s clean energy future. Prudence dictates that India chart an energy future through a long-term sustainable energy transition. A holistic approach to energy production will likely serve India’s future needs better than international cooperation based on narrow foreign policy considerations.

(Published under Creative Commons from 360info™. Read the original article here)