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Mainstream, Vol XLVIII, No 49, November 27, 2010

India-Japan Civil Nuclear Co-Operation Agreement: A Saga of Interests Eclipsing Ideals

Wednesday 1 December 2010

by D. Gnanagurunathan

Hold your faith. The civil nuclear co-operation agreement between India and Japan, that was to have been signed during Prime Minister Manmohan Singh’s visit to Japan in October 2010, has been delayed. Two rounds of negotiations failed to resolve the differences and remain inconclusive. One of the stumbling blocks is Japan’s insistence on India’s commitment for a moratorium on nuclear testing to proceed with the deal. But India is unwilling to compro-mise its ‘strategic autonomy’. So, the stalemate continues and both the sides have agreed to discuss the matter further. At this juncture, it is imperative to analyse the factors that brought nuclear ‘allergic’ Japan and India to the negotiation table for a civil nuclear co-operation agreement. Political stability brought about by the emergence of single dominant parties, the economic exigencies of Japan, India’s demand for technological know-how to augment its nuclear capacity, and the strategic necessity that arises out of the growing power of China impelled the need for civil nuclear co-operation between India and Japan.

The return of the Congress as a single major party to power following the May 2009 general elections had blunted the vagaries of coalition politics to a certain extent in India. The previous Congress-led coalition government’s attempt to conclude the Indo-US nuclear deal had to face opposition from its coalition partners—the Communist Party of India-Marxist (CPI-M), Communist Party of India (CPI) and other minor Left parties. They objected that the Indo-US nuclear deal would not only put India under the obligation of the US to participate in its strategic pursuits but also undermine India’s sovereignty and security due to the uncertainty over fuel supply and monitoring of nuclear facilities in perpetuity. But the Congress-led UPA Govern-ment got through the Bill by successfully weathering a confidence motion and signed the deal, despite the Left parties’ fierce resistance. However, the prevailing political atmosphere is less hostile compared to the one during the previous regime and more conducive for India to sign a nuclear deal with Japan. The pressure on the present Congress-led government is less and the minor coalition partners are in no position to dictate the course of policy-making except perhaps raising objections for minor changes. Moreover, the numerical dominance of the Congress party in the Indian Parliament provides stability which can facilitate the signing of a nuclear deal with Japan, even in the case of opposition from other smaller parties. The passage of the Women’s Reservation Bill in the Rajya Sabha is a case in point.

At the same time, the political matrix of Japan had also undergone a profound change. The victory of the Democratic Party of Japan (DPJ) in the August 30, 2009 elections in Japan ended decades of the Liberal Democratic Party’s (LDP’s) dominant rule, which in turn limited the room for factional manoeuvre. Political infighting and factional squabbling has been one of the principal reasons for instability and poor policy-execution in Japan. The Junichiro Koizumi-led Liberal Democratic Party Government provided a fair amount of political stability and continuity in policy-making, although it was replete with factional infighting. Subsequent to Koizumi’s voluntary retirement in 2006, Japan had to endure three Prime Ministers, a series of ministerial resignations and scandals prior to the August elections. The emergence of the Democratic Party of Japan (DPJ) as the single dominant party with minimal factional influence is gradually attempting to reverse this trend. In addition, the DPJ, unlike the LDP, is relatively free from sectional interests and lobbying. The DPJ also avowed to curtail the interference and dominance of the entrenched bureaucracy in policy-making. The abolition of the ‘Amakudari’ (the institutionalised practice where senior bureaucrats retire to lucrative positions in private and public sectors) system rightly points towards that direction. As a result, a change in the civil nuclear policy-making and its imple-mentation has become less problematic. Even though the Democratic Party of Japan (DPJ) appears to be harping upon nuclear disarmament, its support and approval for a Space Law—it can facilitate the militarisation of the space—signified that the DPJ was a willing partner to negotiate for a civil nuclear co-operation agreement. In addition, fulfilling the DPJ’s election promise of economic recovery also depends on the benefits that accrue from such deals.

Although Japan’s political situation has shown a positive visage, China has replaced its economic status as the second largest economy in the world during the second quarter of this year in August 2010. Japan has already been reeling under the ‘lost decade’ of the 1990s following the collapse of the booming real estate market. The recent sub-prime lending induced financial crisis added more trouble to Japan’s struggling economy by pushing the unemployment rate to 5.60 per cent in July 2009—a historic high. As it is, the engine of the Japanese economic growth is export oriented unlike that of the United States, which depends on domestic consumer spending. Therefore, Japan has to increase its export market and secure new investment destinations in order to overcome its sluggish growth and retain its economic dominance. In that event, India’s burgeoning market becomes attractive for Japan, which can boost export and investment and its economy in the long run.

IN the last decade or so, India’s energy demand is galloping as its economy surges ahead, and conventional energy production has failed to meet those demands. At the same time, India’s civil nuclear energy programme is hampered by lack of advanced technology and expertise despite its long existence and continuous state support. For instance, manufacturing of components for nuclear reactors such as control rods, stainless steel and other alloy fabrication, titanium and zirconium based alloys, heat exchangers, steam generators and large capacity turbo generators are still beyond the capability of Indian industry. Therefore, India’s need for advanced nuclear technology and expertise to augment its capacity for power production through nuclear energy can be met with importation. On the other hand, as of 2008, Japan has fiftyfive reactors operating around the country with a total output of 49,467 MW. Nuclear power accounts for approximately one-third of the country’s total electric power output and Japan is a leader in nuclear energy technology.

The India-Japan relationship in regard to the nuclear issue has been a chequered one. Following India’s nuclear tests in 1998, Japan imposed sanctions and suspended the Official Development Assistance (ODA) to India. At the same time, India imports substantial amounts of nuclear reactor technology and components from Japan. In fact, between 1999 and 2003, nuclear reactors and associated technology were the most imported items in dollar value from Japan accounting for approximately a billion dollars in trade. Therefore, export of nuclear technology to India is economically beneficial to Japan in crunch situations such as the present one.

Besides, the Japan External Trade Organisation (JETRO) and Delhi-Mumbai Industrial Corridor Development Corporation (DMIC) signed a Memorandum of Understanding (MOU) coinciding with the visit of Japanese Prime Minister Yakio Hatoyama in December 2009. The $ 90 billion dollar project involves the use of Japanese technology in fields such as solar power generation and wastewater treatment in building industrial communities along a planned arterial railway for freight transport between Delhi and Mumbai. In addition to that, the memorandum incorporates the promotion of next-generation smart grid technology to transmit electricity, a recycling system, wastewater treatment and renewable energies. Despite economic and defence agreements, Japan refused to entertain India’s overtures for nuclear co-operation following the Indo-US nuclear deal, as it was not a party either to the Nuclear Non-Proliferation Treaty (NPT) or Comprehensive Test Ban Treaty (CTBT). Nonetheless, Japan acquiesced to the Nuclear Suppliers Group’s (NSG’s) waiver on the restrictions of export of nuclear power technology or nuclear related products to India recently at the behest of the US. This suggests that Japan’s reluctance to have a civil nuclear agreement with India has resulted in the accord being backed with sufficient reasoning and persuasion from the side of the US and France, because US companies such as GE and French companies like Areva have collaboration with Japanese companies such as Hitachi and Toshiba in nuclear reactor technology and equipment production. Any transfer of technology either from the US or France mandates the approval of their Japanese counterparts, who in turn require their country’s approval. This is possible only if Japan signs an agreement with India.

HITHERTO, India has signed civilian nuclear agreements with a number of countries—the United States, France, Russia, Mongolia, Kazakhstan, Argentina, Namibia, Canada, the United Kingdom (UK) and Canada. A civil nuclear co-operation with India for Japan would make it avail a slice of the multi-billion dollar nuclear market in India, as it is planning to build forty nuclear reactors by 2032. It would also provide Japan a level playing field with other competitors and an edge over bidders from Russia, China and Korea. For instance, Korea beat Japan in a bid to design and construct nuclear power plants in the Middle East, which was worth over $ 40 billion, in December 2009. It was the single largest contract ever secured by Korean firms overseas and the biggest contract signed in the Gulf region besides military hardware. In such situations, a civilian nuclear agreement would be an advantage for Japanese firms in securing contracts in India.

In the case of India, apart from procuring nuclear related technology, it can also train its graduate students through the ‘Global Initiative on Asian Specialised Nuclear Personnel’ (GIASNP), a programme that was set up by Tokai University covering everything—from plant design to nuclear fuel cycles. This programme was designed to train foreign students from Asian countries—excluding China and Korea— in order to tap their nuclear market. This would make more trained personnel available for India to employ in its nuclear installations and reduce dependence on foreign experts. Moreover, TerraPower, a company owned by Bill Gates, is negotiating with Toshiba in developing the next generation nuclear reactors known as Travelling Wave Reactors (TWR). Such use of the above mentioned technology in nuclear reactor design warrants the employment of depleted uranium as fuel. The core benefit that this design will offer is that the reactor will not have to be refuelled or have its waste removed till the time it is dead, which is about a couple of hundred years. Toshiba, meanwhile, has been working on a new small reactor, dubbed 4S, which is capable of operating for extended periods without fuel replacement. Such cutting-edge technologies will minimise India’s chronic power shortage, reduce the environmental costs that occur out of radio-active waste as well as the dependence on nuclear fuel import to run the nuclear reactors. This has further propelled India’s need for a civil nuclear agreement with Japan.

Apart from this, the emergence of China as a dominant economic and military power in Asia has bridged the gap that existed between India and Japan to some extent. The relationship between China and Japan has deteriorated since the anti-Japan protests in 2005, despite China having replaced the United States as Japan’s major trading partner. Japan perceives China as a threat to its security as the latter continues to grow economically and has increased its defence spending multifold to expand and modernise its military forces. Notwithstanding the improved ties and trade, the relationship between India and China remains lukewarm. Besides the border and territorial disputes, India is also apprehensive about China’s policy towards South Asia, which is India’s sphere of influence. In such a scenario, it is natural for two players in the international system to unite against a common adversary though they are geographically distant ones. Japan intends that an economically and militarily stronger India would be a counter to a domineering China. On the other hand, India requires Japan’s technology and developmental assistance to strengthen its nuclear capability and improve the infrastructure so as to fulfill its great power aspirations.

The quantum of economic and strategic interests that would be served from this deal is gargantuan and cannot be ignored, although there are many issues to be resolved prior to the deal’s progression. In all probability, the India-Japan nuclear deal would materialise despite the delay. Hence, the conducive political climate, expanding economic opportunities, the demand for technology and strategic compulsions have brought India and Japan together for a civil nuclear co-operation agreement.

The author has recently submitted his Ph.D thesis at the Centre for Comparative Politics and Political Theory, School of International Studies, Jawaharlal Nehru University, New Delhi. He can be contacted at gnanagurunathan@gmail.com

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