There was a scintillating talk on “Indo-US Civil Nuclear Co-operation Agreement”, delivered by Shri K Sreedhar Rao, IAS(Retd) & Member, National Security Advisory Board, Govt. of India at Bangalore International centre on 22nd June, 2007 at 6 PM. The session was presided over by Shri A P Venkateswaran, IFS(Retd), Former Foreign Secretary, Govt. of India.

After a brief welcome by the Director of the Centre Shri Sreedhar Rao delivered his talk. The The text of the talk is as under:

“ Ever since July, 2005 the issue of Indo-US Civil Nuclear Co-operation has been in the air and statements, reports and analysis have been emanating from various quarters. Mr. Nicolas Burns the US points man has been burning mid-night oil and on our side the National Security Advisor Shri. M K Narayanan and a high powered negotiating team has been burning equally copious quantities of oil . The Ministry of External Affairs is more involved now as also the Atomic Energy establishment. Several eminent Nuclear Scientists have been making statements some supporting and some opposing. The Leftists see this whole thing as one more conspiracy hatched by haughty American imperialists with nefarious designs of subjugating the poor Indians. The Right speak of failure to safeguard national interests. A good deal of technical terms are also bandied about as part of the discourse. The issue therefore is of considerable interest from a variety of points of view , has lent itself to impressive demonstration and exciting debate and I am sure you and many others would like answers to several questions. I will make an attempt to list the probable questions that may require answers.

1. Does India need this agreement and if so why?
   
2. Are we compromising the nation’s strategic interests by entering into this deal
   
3. What benefits are likely to flow if this deal is ultimately gone through
   
4. Why are the Americans interested in this deal?

In order to understand the fundamental motivation for India to have initiated this dialogue with the USA a brief review of the energy scenario in India needs to be undertaken. Let us remind ourselves that such a dialogue began during the NDA period. (The Strobe Talbolt Jaswant Singh dialogue).

There is little doubt that the energy scenario in India is depressing and is in a mess. The country’s ambition of achieving double digit growth can remain a pipe dream if the current situation is allowed to continue. If the country has to achieve 9% to 10% rate of growth on a sustained long term basis (which is the only way to abolish poverty in this country and not mere slogan mongering), availability of adequate energy from as many sources as possible is a sinequanon and the energy sector has to grow at a rate higher than 10% if we are to make-up for the backlog and provide for the massive growth in demand. Unfortunately, in every plan this country has failed to achieve the target set and has not even achieved 50% of the target. (7th Plan target 30000 MW achieved 20000MW, 9th Plan target 40000 MW achieved 19000 MW, , 10th Plan target 41000 MW likely achievement 23000 MW). On the other hand the total present capacity for the electricity generation is 160 Gegawatts (1 Gegawatts is 1000 MW’s), by 2030 the electricity capacity required for the economy to grow at nearly 10% is 800 Gegawatts i.e. almost 5 times the present capacity. As it is the demand and supply gap is nearly 40,000 MW’s and is slated to grow. China is already producing 800 Gegawatts and is adding 50 Gegawatts or more every 5 years.

1. Coal
   
2. Hydro carbons ( Petroleum & Gas)
   
3. Hydro Power
   
4. Non conventional sources of energy &
   
5. Nuclear

We are dependant to the extent of 70% on imports as regards petroleum and Gas and this may go up to 90%. Already reports indicate that even Saudi production has peeked and with no new worthwhile discoveries and there is the strong possibility of steady decline in supplies. Unfortunately, an overwhelming proportion of the world’s petroleum & gas reserves are in highly unstable, volatile and conflict prone areas with seemingly unresolvable and deep seated animosities (the Middle East, Nigeria etc). If Mahmoud Ahmedinejad breathes fire which he often does or Iran’s the supreme leader Ayatollah Khamanei hits out at the American devil, oil prices jump. Crude Oil prices which are now around $ 70 are predicted to exceed $100 in the near future casting a heavy burden on economies such as India heavily dependent on imported oil and Gas. Natural Gas and LNG are indexed to the price of oil. Coal and natural Uranium prices have gone up in the international markets, in sympathy with oil prices. Our efforts to obtain Gas through from Iran – the IPI pipeline, Turkmenistan – the TAP pipeline and from Myanmar via Bangladesh are all fraught with serious political and security related concerns and can remain pipe dreams. We may be heading for a double whammy of declining availability and rising prices. Like Coal Oil is also highly polluting and has been contributing to global warming in a big way.

As to non-conventional energies almost all the technologies are yet to be economically viable at present and heavily dependent on subsidies. Recent developments however in the field of solar energy with the cost of photo voltaic cells coming down progressively, seem to hold very substantial promise even in near term though recently there has been some increase in prices due to shortage of silicon. Some Bio fuels appear to be promising (Jetropha), but once again one must strike a note of caution as any large scale diversion of land can have serious adverse consequences as regards the food chain. Already because of heavy subsidies the foolish Americans are diverting huge tracts of land to grow Maize to be converted to Bio fuel, even though the cost of production without subsided is more than the cost of fossil fuels. The Germans have a legitimate grouse – beer prices are going up as barley is being taken away for biofuels. A far better alternative is the Brazilian route of manufacturing ethanol from sugarcane. We have started this recently in a small way.

As regards Hydro power the initial capital cost are very heavy and in India most of the rivers which can be exploited are in the Himalayas or in the North East. While efforts to exploit Hydro power has been stepped up there can be serious problems of transmission over long distances to centres of consumption and if the dire prediction on Global Warming come true with the melting of Himalayan snows and glaciers, hydro energy generation can run into grave difficulties. Population pressures deforestation, soil erosion and steep reduction in output during the dry season are all factors which affect exploitation of the hydro potential. Co-operation with countries like Nepal have their own limitations. With Bhutan however we have had substantial successes.

On top of this attention needs to be drawn to the ills that plague the electricity sector in the country. Briefly these are

1. Inefficient and corrupt SEB’s overburdened by disproportionately large and in-disciplined staff and unlimited political interference.
2. T & D losses (over 40%) which refuse to come down.
3. Free power to the farm sector used often to cover up theft with the connivance of the staff.
4. Failure to attract private investment which is scared away by uncertainties of recovering costs, and lack of freedom to sell power generated.
5. Lack of political will being hostage to electoral politics. All the talk of power sector reform for the past ten years have not yielded any tangible results.

You may recall how the Orissa experiment failed and privatization in New Delhi has not been a success.

All this bring us to the question whether India should go forward to exploit nuclear energy. France for example gets nearly 60% of its energy through the nuclear route. After the “Chernobyl” disaster grave safety concerns had been raised, but it appears that technological progress and improved design has to a very large extent, reduced these concerns though not all together eliminated. The cost factor is still an issue, but compared to coal and the fossil fuels as feeds stocks, the nuclear route is environmentally friendly and in course if time when nuclear fusion becomes possible, there can be unlimited supply of energy. The Chinese have recently claimed that they have made substantial progress in this area.

No doubt India should continue to work towards exploring all avenues as regards energy generation – solar energy, wind energy clean coal technologies, Gas hydrate, better utilization of its Gas finds where there seems to be substantial progress. (It would appear, as per some estimates that India may become almost self reliant with respect to Natural Gas was only marginal imports by 2010-2011 bur the Directorate of Hydro carbons has unfortunately heavily discounted these estimates). Recent developments for using Hydrogen seem to hold a great deal of promise. We should also pay adequate attention to energy conservation, technology up-gradation by better use of super critical boilers with higher thermal efficiency. We must cut down wasteful and inefficient use of imported fuels such as diesel, (truck transportation while railways can be used). Much needed reforms in the electricity sector – open access systems, realistic pricing – need to be taken up.
In this scenario the renewed interest in exploiting Nuclear energy appears to be justified., but as you are aware after Pokran I in 1974, India became a nuclear paraiah. We rightly refused to sign the nuclear non-proliferation treaty- a highly discriminatory document recognizing only those who exploded a nuclear weapon by 1968 as “weapons power” and permanently denying all others of the right of develop a nuclear weapon, even in the face of imminent threat, in a dangerous security environment. Also none of the signatories particularly the nuclear weapon powers bothered to implement the most fundamental provision of the NPT which called for universal nuclear disarmament. After all this is supposed to be a ”nonproliferation treaty”. It can’t be NP for others and P for an exclusive club of five.

As of now our entire nuclear energy program suffers from serious limitations primarily inadequacy of the basic nuclear fuel namely Uranium and lack of technological sophistication. Since, we are not signatories of the NPT and since we became a defacto nuclear weapon power, we have no access to Uranium from any source and for the technology to build larger and more sophisticated nuclear power plants. After decades of sincere and concentrated efforts nuclear energy does not contribute more than 3% (around 5000 MW) of the total energy generation in India and our design capabilities enable us to build nuclear power plants of only around 500 MW and for this also we take anything up to 10 years. Our indigenous availability of Uranium is capable of supporting a programme of only around 100000 MWs but again has become a victim of environmental lobbies and ill advised agitations prticulars in the Khasi hills. The Hywenwit Achik liberation Army and the Khasi Students Union have threatened mayhem if mining is continues in that area. On top of this the ore that we have is of poor quality – called tail end quality compared to Australian or Namibian ores and this an impact on the cost of generating energy. Yes we have built nuclear weapons, have the capability to produce a hydrogen bomb (Pokhra II) and are supposed to have a credible nuclear deterrence, but for achieving this deterrence based totally on indigenous efforts (unlike Pakistan) the country has paid a heavy price. The country has been naturally anxious to get out of this uncomfortable situation. After 1998 Pokhran II efforts were made by the Vajpayee Government to get the international community particularly the US to review their stance as regard co-operation in the field of nuclear energy. The famous Strobe Talbot– Jaswant Singh dialogue may be recalled. India realizes that even though we have some 1/3rd of the world’s thorium reserves, technology is not available to use this as a nuclear fuel, though work is going on in this area. Our Scientists tell us that Thorium utilization is possible only after nearly 30 years and even for this very substantial quantum of Uranium is required. If after thirty years of effort some one tells you that at least another thirty years is required, you know that the problem is nowhere near solution.

Let us also remember that in the history of nuclear programmes anywhere in the world no country has truly self reliance. The Americans built on what the Germans had started, right from the path breaking discovering of Einstein. The Russians stole nuclear secrets from the Americans. The British and French programmes as well as that of Israel are of American origin and benefited substantially from American assistance. The Chinese got substantial assistance from the Russians and every one knows Pakistan’s programme is entirely based on Chinese technology and dependent on Chinese assistance not to mention the thieving and smuggling of material and technology by AG Khan and his ilk. To a certain extent the North Korean program has received substantial support from both China and Pakistan. And there is the nefarious cooperation among China Pakistan and N Korea with respect to both weapons and delivery capability. Even the Iranian programme had received US assistance during the time of the Shah and the AQ Khan proliferation network in recent times.

So it’s against this background that the historic July 18, 2005 – Bush – Manamohan Singh agreement was concluded. Briefly the elements of this agreement are as follows:

1. The US recognizes India as a responsible State (such as the US) with advanced nuclear technology and hence, should be entitled to benefits and advantage available to such states. India would reciprocally agree that it would ready to assume responsibilities and practices and acquire the same benefits and advantages as other leading countries with advanced nuclear technology such as the United States”. In other words, India though not a signatory of NPT is to be recognized as nuclear weapon State and be able to procure raw material as well as technology for (let it be clear) only for civil nuclear energy and not for weapons.
2. The agreement commits US to modify its legislative framework to enable India to purchase raw material and technology.
3. The US also commits to work with friends and allies i.e. the nuclear supply group of countries who will conclude separate with India for he same twin purposes.
4. In the process India can come out of its long nuclear isolation. And many a door will be opened both for Uranium ore and technology.

Similarly India will have to conclude agreements with International Atomic Energy Agency for the purpose of inspection / safeguards etc.

So substantial a change in the way the Americans and others will treat India with regard to nuclear energy and availability of Uranium and nuclear technology naturally will demand a price and what is this price? India has agreed

1. That it will separate the existing nuclear establishments into two categories namely civilian and weapon related programmes. (14 civilian & 8 weapons related).
2. The civilian nuclear establishment will alone be entitled to utilize the Uranium and technologies that can become available under the agreement.
3. These civilian nuclear establishments will be subject IAEA safeguards and inspections.
4. Any new nuclear establishment will have to be designated in advance as civilian or military with the consequences in terms of availability of raw material and technology as well as safeguards.
5. Those declared as military installations (present eight and any future unit) will not be subject to inspection or safeguards.

As you are aware this agreement as of now has gone through the legislative process in the US resulting ultimately in the “Hyde Act” which has been signed into law by the American President and received bipartisan support inspite of some nervousness on our side. But the “Hyde Act” while containing the elements mentioned above, favourable to India, since it has to be in conformity with America’s atomic energy Act, contains provisions which are considered by some to be against our interest and about which a good deal of screaming is going on. Basically these concerns are

1. India cannot test a new nuclear weapon and if it foolishly does the Indo-US agreement will be terminated. In other words, the voluntary unilateral moratorium declared by Vajpayee after Pokhran II is sought to be converted into a bilateral legally binding permanent commitment.
2. If India does foolishly test it is also expected to return the equipment and fuel transferred. This again is in conformity with the US Atomic Energy Act.
3. The 3rd sticking point is the right to reprocessing spent fuel and the technology thereof. The American’s do not want to give us this technology as the fear is that such reprocessing can boost the weapons program. It is through reprocessing that Plutonium is extracted and India’s weapons programme is basically Plutonium based. Our fast breeder reactor programme will benefit by this reprocessing technology. Also for the Thorium utilization one prototype has been built in Kalpakkam. (In Tarapur the US neither permitted reprocessing or took back spent fuel). The Americans are being somewhat unreasonable in this as such a requirement is not dictated either by the Hyde Act or the US Atomic Energy Act and countries like Japan have been permitted reprocessing. Let it be said also that India is already undertaking reprocessing though on a fairly small scale.
4. The 4th sticking point is denial of fuel to energy plants which have come into being during the currency of the agreement, but can be starved due to unilateral action. The Tarapur experience has been bitter for India and what India is asking for a “life time assurance of raw material supplies”.

As of now after the “Hyde Act” dialogue is on to conclude what is known as the 123 agreement which is the agreement envisaged under US Atomic Energy Act and has hence to be in conformity with the Act. Some statements indicate that some considerable ground has been covered and Nicholas Burns has been to Delhi. Some feel that a political decision is required as the officials have exhausted themselves negotiating. While the question of return of material, the reprocessing and life time supplies can it appears be resolved in a manner which is not entirely un-satisfactory, the major issue that requires India to take a decision will be the permanent moratorium on further tests. India has been arguing that India will have to test if China or Pakistan conducts a test. Indeed it is the Americans who are continuing to develop newer and more sophisticated nuclear weapons ignoring totally the provisions of NPT and they are in the process of developing “reliable replacement war heads or RRW” (which are more robust earth penetrating devices), So if the Americans test it, this will be considered a direct threat by the Russians and the Chinese and they will go about developing matching weapons and delivery system. Hence a new armes race will be triggered not by any one else but by the American’s. The American’s have been indicating that if at all this contingency arises then America will bail us out by the President exercising his prerogative of a “waiver”, exempting us from the lethal consequences of conducting a test.

Let us therefore consider briefly whether the benefit if India is to derive from this deal is more than adequate to compensate for the negative points mentioned above.

I have no doubt that we need this deal and the price to be paid is well within tolerable limits. The advantages are

• We will get out of nuclear isolation
• Have open access to much needed Uranium and Technology enabling us to accelerate the nuclear energy program
• Build nuclear power plants at a much faster rates (France builds 1650 MW’s in 3 years against India 200 MW’s in 10 years). Carry on our weapons programmes having been acknowledged as a nuclear weapon power by the international community
• Derive benefits of the NPT even if we are not signatories of the NPT

What needs to be understood is that after long period the Americans want to be our friends having treated us as Russian stooges for a long time. The Americans are already supporting us in a number of areas including Kashmir and correspondingly degrading their relations with Pakistan. This deal does open up a huge window of opportunity and in a number of areas such as Science and Technology, economic, commercial, political and diplomatic one can look forward to a much better appreciation of India’s needs by the Americans. Hence, this agreement needs to be viewed in the wider context of substantial expansion of Indo-US co-operation in a variety of areas.

Yes we have been told not to conduct any more tests and the deal is off if we are foolish enough to conduct the test, but the Americans point out that look you your self have declared a unilateral moratorium and “no first use”. They hint darkly that you already have a stock pile more than what is required for a credible deterrence and have under development adequate delivery capabilities. There is of course provision of the Presidential waiver, but that will happen only if there is an extreme event and we continue to be in the good books of the Americans. I also feel that we have desisted from testing from 1974 to 1998 while quietly developing the technologies and have not tested for the past 10 years. Why can’t we keep quiet for another 20 years get all the benefits out of this agreement as quickly as possible and be prepared to throw out the agreement if testing is so definitely necessary?

Why are the Americans being friendly to us? What do they have in this? It would appear that Bush administrator has indeed invested heavily in this deal and Bush himself regards this as a personal triumph a much needed one as against so many of his failure. The American foreign policy establishment does believe that there is great and growing convergence of interest between India and the US. Both countries face common threats international terrorism, Islamic fundamentalism and need to counter. China’s growing economic and political clout. The Americans are particularly nervous about China’s forays into Latin America and Africa and the growth of left oriented regimes in their own backyard. The Americans are now regarded as the enemies to be crushed in the whole of the Islamic World and the relations with Russia has become prickly with some angry rhetoric from both sides caused by the American’s intruding into erstwhile satellites of the ex-USSR (missile defense etc). The Europeans have shown their inclination to independent line of foreign policies. The American therefore see a diminishing circle of friend and reliable allies. They want new friends and they are prepared to review long standing positions.”

The interaction that followed the talk was lively. While complimenting Shri Rao on the clarity of his exposition, several participants observed that the right for reprocessing the nuclear fuel after use does not exist in the Agreement and that several nuclear scientists seem to be opposed to it. In his response, Shri Rao stated that the right to reprocess spent fuel may come a little later, as it did in the case of Japan, and in any case the technology could be developed indigenously after the validity period of the Agreement gets over. He also stressed that nuclear scientists were fully involved at every stage of negotiation of the Agreement. Some participants referred to the difference of opinion existing between the engineers and scientists within the Nuclear Establishment as the major factor causing a division in this area. Shri Rao responded to several other points for clarification raised during the discussion. All in all, it was a high quality interactive session.

The session concluded with a vote of thanks by the Director of the Centre.