The Price Of Triumph: NSG Waiver And After


The Price Of Triumph: NSG Waiver And After


THE NSG waiver is now officially in the bag, with the Indian media portraying this to be a major foreign policy victory. What has been lost sight of in this triumphalist version, is that the NSG was set-up by the US as a cartel of nuclear suppliers primarily to coerce India into the NPT. Once the US had done its own deal with India, the NSG waiver was a foregone conclusion. The only issue was how clean and unconditional it would be. As we will see below, the NSG waiver is also on the lines of the Hyde Act and the 123 conditions.

The nuclear deal has been painted in India by its supporters as one for securing fuel and technology for India’s nuclear energy program and nothing else. However, the US officials have made plain from the beginning that lifting nuclear sanctions was the concession they were willing to give India in lieu of India entering into a “strategic partnership” with the US. In addition, selling India reactors from their dying nuclear industry also meant billions of dollars in orders and thousands of jobs for Americans. So when we look at the nuclear deal, we need to look at both sides of the equation: what is it that India is getting and what is the price that it is paying for this deal.

The Hyde Act and the subsequent 123 Agreement spelt out the price we would have to pay and are paying in terms of strategic relationship with the US. The lifting of sanctions would allow us to import reactors and uranium and ease the restrictions on nuclear energy. The question of course is how much energy we are going to get from the nuclear route and what will the cost of such energy be?


As we already know, the total energy from nuclear plants would only be a small fraction of our energy needs and that too, at costs that would push up the price of electricity beyond reasonable levels. So let us look at the flip side of the coin, the price India is promising to pay in strategic terms.

First, the NSG waiver itself. The NSG in its first meeting had noted that there were serious objections from a number of countries on giving India the required waiver on sanctions. A number of conditions were asked to be incorporated before the NSG would consider the waiver. The US side played a relatively quiet game in this meeting, stating that India would have to climb the NSG mountain on its own and they could only be the “sherpas”. By the second NSG meeting, things had changed considerably. One, of course, is the draft itself, where various conditions were additionally introduced. The second was a far more aggressive role the US took in getting the waiver through.

The reason for the US playing a much more aggressive role is not difficult to discern. India has now made declared its intentions to align with the US publicly. The clearest indicator was the September 5 statement of external affairs minister Pranab Mukherjee, in which India stated categorically that it will join the US’s attempts to deny Iran the fuel cycle, a right it has always declared Iran has under NPT. In a complete reversal of this, Pranab Mukherjee statement says India will now join international efforts to “limit the spread of ENR (enrichment and reprocessing) equipment or technologies to states that do not have them”. To those who may be unfamiliar with the NPT terms, Article IV of NPT allows all countries the right to peaceful uses of nuclear energy without any restriction. This obviously includes the fuel cycle and therefore enrichment and reprocessing. The US had argued in the last NPT review of the need to restrict this right of the fuel cycle to countries that already have it and deny it to others. With this one statement, India is not only a part of the NPT regime on the side of the nuclear weapon states, but it has also endorsed the NPT plus stand of the US. More importantly, India signalled even more clearly its intention to join with the US on the Iran issue, a precondition of the Hyde Act.

The second part of India’s change is regarding defence relations. At the time of writing this A K Antony, the Indian defence minister has embarked on a visit to the US. During this visit he expects to finalise three agreements. These are: Logistics Supply Agreement that would allow US ships and aircraft to use Indian berthing and refuelling facilities; End User Verification Agreement, under which Americans will carry out annual on-site inspection of all systems sold to India from American defence firms; Communications and Information Security Memorandum of Agreement (CISMOA), which will allow the US to monitor and access communications equipment sold to India.

The last two would be a direct violation of India’s sovereignty and has dangerous consequences. Effectively, the US will monitor and exercise some control over defence equipment it sells India.


For those who have been following up the strategic aspects of the India-US nuclear deal, are aware that the Logistics Service Agreement was always a part of the package. India gets US support for lifting nuclear sanctions, while India accepts that the US fleet and US Air Force can now freely access India’s ports and other facilities. The US forces can bomb Iran and Iraq and then come to India for refuelling, rest, and recreation. Given the way the US policy on Iran is shaping up, India’s support – both political and physical – is important for the US. This is what India is now agreeing to without taking into consideration what is in its national interest. The only sane course on Iran is to get the international community to engage with Iran and see how their nuclear energy program can be continued without the danger of nuclear weapons. Instead, we have signed on a dangerous course, which will not only damage our chances of getting energy supplies from West Asia and Iran, but has the potential of the whole of West Asia going up in flames.

The other consequence of the Logistics Service Agreement is that it imposes inter-operability between the US forces and the forces of countries that sign the agreement. It means that the two sets of forces would use the same equipment in order to have this interoperability. All over the world, this has always meant buying huge quantities of arms from the US to enable this so-called inter-operability. It is a way of tying other countries not only in a strategic web, but also to ensure the sale of large amounts of military hardware: it is billions of dollars in arms sales. The sale of 126 US fighter aircraft currently on the anvil would be greatly helped by this agreement.

On the NSG text, India agreed to a further set of measures that it had denied before the first draft. India has now agreed that any fuel supply agreement will be subject to periodic NSG review. While India clearly does not have fuel supply assurances as claimed by the government, the Safeguards on India’s nuclear facilities will be in perpetuity. The reference to GOV/1621 in the waiver ensures that India cannot withdraw its facilities from safeguards. It might be noted that adherence by India to GOV/1621 of IAEA is also a part of the Hyde Act. Pranab Mukherjee’s statement of September 5 is now a part of the text, with India agreeing to uphold the NPT regime that it had up till now described as discriminatory and therefore unstable. Like all other nuclear weapon states, India will henceforth preach disarmament to others while keeping nuclear weapons for itself.

Further, India has also agreed to be bound by the NSG guidelines and any future modifications of the Guidelines while not being a part of the NSG. Its only right will be to be consulted by the chair of the NSG.

Once India had virtually agreed to these terms, the US then swung into action. If we look at the sequence, the game is not difficult to see. First, encourage smaller countries to oppose the waiver in order not only to bind India more securely to the Hyde Act conditions but also to pressure India on Iran and on deeper strategic ties. India then caved in, the Pranab Mukherjee September 5 statement being one indication. It is only after that the US then delivered on its original promise of helping to lift sanctions in the NSG.


For those who are talking of this so-called clean waiver, have not understood the reality of NSG. It is a nuclear suppliers cartel, its discussions are secret and its waiver can be changed at will. That is why the terms of the waiver that have been spelt out tell only half the story. The discussions and the country statements made in the NSG makes clear that the moratorium on tests has been now made multilateral, there will be periodic review of India’s “performance”, and enrichment and reprocessing are hedged in ways that India has very little possibility of getting such technologies. The US made clear in its statements to the NSG that it is not proposing to supply this to India and this was endorsed by all countries that do have such technologies.

A number of commentators supporting the Deal have talked about India not needing the 123 Agreement and going to others immediately. The reality of the NSG waiver has now been made clear by Pranab Mukherjee – under public directions from Condoleeza Rice – India would need to sign the 123 Agreement before signing agreements with others. The 123 Agreement is central to the NSG waiver and all other agreements are contingent on its successful completion. Yes, India may be able to secure uranium without the 123 Agreement. In any case, it always had the option of importing uranium from non NSG countries such as Niger and Namibia, an option it has chosen not to exercise all this while talking about a uranium shortage. The current deal is not just about importing uranium but lifting of nuclear sanctions on India. Therefore, to paint securing uranium supplies as a huge victory is another case of hiding the truth from the Indian people.


This brings us back to the 123 Agreement, which is being placed before the US Congress in September, after which presumably it would be signed by Bush and Manmohan Singh. A few days before the second meeting of the NSG, Berman, the current chair of the Foreign Affairs Committee of the US Congress, made public the US State Department answers that it had supplied to the committee 10 months back. We had commented earlier (see PD, June 22, 2008 issue) that the secrecy of this communication was not because the US State Department was keeping its answers secret from the US Congress but because the answers would make clear what the Indian government was lying about the 123 Agreement all along: this fraud would be completely exposed if the State Department’s answers became public. Berman, who is now the chairman of the Committee after Lantos’s death, released the text of the State Department’s answers on September 2. There were a total of 43 questions out of which, some refer to the questions the Left had also raised on the Agreement.

The first referred to the so-called fuel supply guarantees. Manmohan Singh had maintained in parliament on various occasions that the Clause 5.6 of the 123 Agreement gave India cast-iron fuel supply assurances: in case the US withdrew from its fuel supply obligations, it would help India secure alternate supplies. The Left had argued that this fuel supply assurance was only for cases of market failures and did not cover any suspension of supplies or termination of the Agreement. The State Department’s answer to Question 15 states:

It is the understanding of the United Sates government that the use of the phrase ‘disruption of fuel supplies’ in the Article 5.6 of the 123 Agreement is meant to refer to disruptions in supply to India that may result through no fault of its own. Examples include (but are not limited to) a trade war resulting in the cutoff of supply, market disruptions in the global supply of fuel, and the potential failure of an American company to fulfill fuel supply contracts. We believe the Indian government shares our understanding of this provision.

Contrary to what the UPA and the PM had stated in parliament, the IAEA Safeguards are in perpetuity while the fuel supply assurances only cover market failures. The answer to Question 17 makes this even clearer. It states that the termination Article 14 of the Agreement, if invoked, would make Article 5.6 (the so-called fuel supply assurance clause) “inapplicable”.

The termination clause in 123 Agreement is open-ended and an omnibus one. The US can terminate the agreement whenever it wants and can stop all fuel supplies immediately. For those who think that the termination of the agreement or stopping of fuel supplies is only if we test, should read the agreement again. Article 14 is not limited to only testing, and can be invoked at the sweet will of the US president or the US Congress. This is now confirmed by the answers to questions 14, 17, 35 and 36. This means that the US can stop all supplies if, for example, India does not toe the US line on Iran. The US has the legal right under Article 14 to cease all cooperation. While the formal termination is with one year’s notice, the cessation of all supplies is immediate and solely at the discretion of the US.

On strategic reserves, again the Berman letter clarifies what the Left had stated in the Left-UPA exchanges. The US construction of the clause is that this depends on the definition of strategic reserves and the US regards this to be operational requirements as per Hyde Act. Incidentally, the Hyde Act provision of not allowing India nuclear fuel in excess of operation requirements was introduced by Barack Obama.

On enrichment and reprocessing technologies, the Berman letter clarifies that here also, the Hyde Act provisions have been built into the 123 Agreement. India will not get access to enrichment and reprocessing technologies, a position that the US has reiterated in the NSG.

The Indian strategic establishment has always held that the view that for breaking the nuclear sanctions, India should be prepared to barter its foreign policy and economy. Allow the US free access to India’s economy, align with the US strategically and India will become a big power, whatever that might mean. It is clear to the meanest intellect that when Condi Rice talks about a strategic partnership between India and the US, she is not talking about an equal partner. The status that the US can give any country is enshrined its strategic doctrine – it will brook no rival not only globally but in any region. The position that is open to India is that of a regional junior partner. And that is what this government is more than pleased to receive. The question here is how does becoming a subordinate ally of the US make India a big power? Is this price worth paying for what at best would amount to only 5 per cent of our energy needs?