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Thursday, July 10, 2008

Travails of a nuclear deal


In the twilight of George W. Bush's presidency, there is an unseemly rush in Washington and New Delhi to seal a contentious but far-from-complete civil nuclear deal, even as that issue has landed India in a political crisis.

To help secure a much-needed feather for the empty caps of President Bush and Indian Prime Minister Manmohan Singh, moves are afoot to ram through the approvals the deal still needs from the International Atomic Energy Agency, the 45-nation Nuclear Suppliers' Group and — at the very end — the U.S. Congress, which has to ratify the final package.

Yet, three years after it was unveiled with fanfare as an epoch-making accord, the deal's final shape remains unclear and its future uncertain. Little time is left for the deal to win the remaining approvals during the Bush presidency. But rather than leave the final say to a future Barack Obama or John McCain administration — and a new Indian government — the two lame-duck heads of government, Bush and Singh, are seeking to make a final dash to wrap up the deal.

Singh has pledged that after returning home from the G8 meeting in Japan, he will take the deal to the next stage by sending the safeguards accord to the IAEA's governing board for approval.

Bush, pressing Singh hard to move the deal forward, has promised an extraordinary NSG plenary meeting to consider a rule-change for India. In fact, by raising the phantom of rushed approvals, the Bush administration has not only lead Singh up the garden path but also emboldened him to precipitate a political crisis at home over the deal.

The showdown has seen Singh willing to jettison support by leftist groups for a new alignment with a prickly regional party to keep his shaky coalition in power. India has had weak governments but never a weaker leader than Singh. But today, Singh has promoted shadowy horse-trading to prevent his government's collapse over his deal-related obsession.

At a time when Bush is set to exit the world stage and Singh's 10-month remainder term could be cut shorter by political events at home, the deal is hardly the weighty issue that should merit urgency or determine any government's future.

With or without the deal, the U.S.-India relationship is set toward closer engagement. This geopolitical direction was established long before the deal was unveiled in July 2005. The mistake has been to politically over-invest in the deal, going to the extent of meretriciously presenting it as the centerpiece of an emerging Indo-U.S. strategic partnership. No major relationship can afford to rise and fall on the strength of a single issue.

Also, with or without the deal, nuclear energy will continue to play a modest role in India's energy mix. Even with an ambitious program involving reactor imports, the share of nuclear power in India's total electricity generation is unlikely to significantly rise above the current 2.8 percent. Not only is the share of other energy sources rising faster in India, but new imported power reactors — because of the long lead time required for construction and commissioning — will start to produce electricity only after the mid-2010s at the earliest.

Although the original agreement- in-principle was embedded in a larger strategic framework — with the nuclear-related portion constituting only four paragraphs in a long joint statement — Singh sought to sell the deal principally as an arrangement to help meet India's burgeoning energy needs. His energy spiel has contrasted starkly with the deal's portrayal by the Bush administration as a means to advance U.S. strategic and commercial objectives in India.

Still, Bush and Singh continue to recite a major myth — that greater nuclear-generated electricity will help reduce India's oil-import dependence and thereby pressures on world oil prices. With little overlap today in the oil and nuclear global-market structures, nuclear power competes principally against coal and natural gas, while oil is primarily used for transportation.

Reactor imports, far from cutting India's oil needs, will only increase the already-wide domestic price differential between nuclear energy and coal-generated electricity and hydropower.

Just as cheap oil now appears fanciful, cheap nuclear power for long has been a mirage. More than half a century after then U.S. Atomic Energy Agency Chairman Lewis Strauss claimed that nuclear energy would become "too cheap to meter," the nuclear power industry everywhere subsists on generous state subsidies, which do not reflect in the published costs of generation.

Power reactors also involve high up-front capital costs and drawn-out amortization periods that discourage private investors. The present electricity-market liberalization trends indeed spell trouble for the global nuclear-power industry because they threaten the state support on which it survives. As a 2005 IAEA study warns, "nuclear power's market share might indeed follow a downward trajectory" if state subsidies abate and more cost-effective reactors are not designed.

However well-intentioned, a deal limited to one narrow area — commercial nuclear power — can hardly serve as a suitable framework to build a broad-based, enduring partnership between the most powerful and most populous democracies. Depicting the deal as a central element, if not the touchstone, of the U.S.-India partnership only suggests that the base of this relationship is still too small.

In fact, a deal touted as heralding a new era between the U.S. and India has actually succeeded in infusing controversy and complexity into that relationship.

While U.S. critics have worried the deal could dent the nonproliferation regime, no issue has proven more divisive in India in modern times than this accord. The progressive U.S. attachment of tougher conditions to make the deal more palatable to the nonproliferation constituency has only provoked an Indian backlash.

Singh repeatedly promised to build "the broadest possible consensus within the country to enable the next steps to be taken." But having failed to do that, he now is moving forward on his own.

In contrast, the much-maligned Bush administration has handled the deal domestically by forging an impressive political consensus. The law passed by Congress in December 2006 to govern the deal was the product of such consensus-building and political co-option, with the administration holding closed-door briefings for lawmakers and allowing its 3 1/2-page bill to be turned into a 41-page, conditions-stacked legislation. Bipartisan support also holds the key to the deal eventually winning congressional ratification.

In India, the growing partisan rancor does not augur well for the deal because it will have to be implemented well after the Singh has faded into history.

If the bilateral relationship is not to be weighed down by a political albatross, Washington and New Delhi need to ensure that the deal does not foster disputes that embitter and set back ties. A deal that is more about symbolism than substance, in any event, does not warrant a rush.

Brahma Chellaney, a professor of strategic studies at the privately funded Center for Policy Research in New Delhi, is the author, among others, of "Nuclear Proliferation: The U.S.-India Conflict."


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