Walking away from a very good deal

The Acorn has been a supporter of the India-US nuclear deal as concluded between Prime Minister Manmohan Singh and President George Bush in March 2006. It has argued that for India, the benefits of the deal are worth making some difficult concessions---separating civilian nuclear facilities from military ones, and accepting constraints on the amount of fissile material India needs to produce nuclear weapons. The agreement allows India to retain a dynamic credible nuclear deterrent---although the contours of the deterrence need to change---while ending its costly isolation from the international nuclear power industry. The deal, moreover, is also part of a strategic transformation of relations with the United States mandated by convergence of interests in the geopolitics of the twenty-first century.

The Hyde Act, passed by the US Congress last year, introduced a qualitative change in the letter and spirit of the agreement that negotiators worked so hard to achieve. It has raised several contentious issues, but the most significant one involves linking America's keeping its end of the deal (to supply nuclear technology and fuel for India's civilian nuclear power industry) to India's non-testing of nuclear weapons.

This is over and above India agreeing to isolate its civilian facilities from the weapons programmes, and agreeing to safeguards to ensure that there is no illegal transfer from one to the other. [Read what prominent Indian strategic analysts have to say]

By insisting that in the event of an Indian nuclear test, the United States can not only suspend fuel supplies, but seek possession of material already supplied, the Hyde Act seeks to ban India from further testing. In other words, it seeks to turn India's unilateral moratorium on further testing into a bilateral legality. The United States is also pressing other members of the Nuclear Suppliers Group to insist on the same conditions. [Related Posts: Cynical Nerd & Maverick]

By evoking memories of past letdowns, the Hyde Act has already undermined the benefits that might have accrued to the American nuclear power industry. Even if India were to accept the terms of the Hyde Act in totality, it would hedge its risks by not relying on nuclear energy as much as it would have without the onerous conditions. That would make the market for nuclear energy smaller that it would otherwise have been. And it would be even smaller for American suppliers, as India would move to ensure greater supply diversity. In other words, India would minimize reliance on nuclear energy and American suppliers in order to minimize the costs of testing nuclear weapons should the need arise.

Moreover, other than pure dogma, it is unclear how America stands to benefit preventing India from conducting another nuclear test. Moratorium or not, no government in India would be foolish enough to attract international opprobrium by conducting unilateral tests again. India is only likely to test should other nuclear powers begin to do so again. Indeed, the United States can use the possibility of an Indian test to discourage other nuclear powers from testing. That possibility would vanish if India is legally bound not to test.

The negotiations on the "123 agreement" are far from over, and the deal is far from dead. It is a deal that is worth having, both for its own sake and for the sake of the broader bilateral relationship. So a degree of mutual compromise is in order, even if the terms of the 123 agreement are in variance with what was agreed between Prime Minister Singh and President Bush. This does not, however, mean that the deal is worth having at all costs. Even if historical and current context were to be ignored, there is no question of India accepting a formal legal restraint on its nuclear options. America is constrained by its laws. But India cannot allow those laws to circumscribe its strategic independence. If diplomacy fails to address its concerns, India should be prepared to walk away from the deal.