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Mainstream, Vol XLVI No 34

Renegotiate What in the 123?—An Enormous Amount!

Sunday 10 August 2008, by Ashok Parthasarathi


The article by G. Balachandran in The Indian Express of July 22, 2008 entitled “Renegotiate What?” (in the 123 Agreement) is grossly inadequate, indeed dismissive. There are numerous Articles in the so-called Indo-US 123, “frozen” with effect from August 1, 2007, that require major re-negotiation. Here goes.

Firstly, Article 2.1 specifying that “Each Party … Respective national laws …”, is highly dangerous. That is why both the US-China and the US-Japan 123 are worded to contain the over-riding provision in the respective 123 Agreements being subject to international law. This must be brought about by renegotiation as there already are well-established precedents as indicated above.

Secondly, as regards further Indian nuclear tests, the author asks rhetorically whether any future government of ours would be able to get “a written promise that the US Congress will not impose any sanctions on us if we do a test”. I agree such a promise may not be securable. But what we can and should get from the Congress is mere silence on the matter, that is, what we have from both Russia and France, demonstrated operationally in not even a single observation by the governments of those countries after our 1998 Shakti tests. What is sauce for the goose is entirely possible to be sauce for the gander! Balachandran states “no one seriously suggests that a new GOI would be able to influence the US Congress to modify Hyde accordingly”! I believe a de facto ban on orders by our Nuclear Power Corporation of India Limited (NPCIL) on the US nuclear reactor company Westinghouse can do so.

Thirdly, Balachandran continues to beat the dead horse of Hyde being a “purely US domestic law, with no relevance for India”. This is not correct. No less a person than the US Secretary of State (Foreign Minister) of USA has testified before the House Foreign Relations Committee of the US Congress as recently as March 16, 2008 that the Hyde Act applied to India as well. So, we can and must re-negotiate with US Congress through the USG to get the “silence clause” on nuclear testing brought into the Hyde Act to replace the existing termination and civil nuclear sanctions/provisions of Hyde, if we do tests. Even Balachandran admits that: “However, the text (of the 123 Agreement) has the leeway in it for a future US Government to exercise restraint in regard to the rights conferred on it under the US Atomic Energy Act 1954 (as amended latest in 1992) to not be triggered by an Indian nuclear test to abrogate the present Indo-US 123 Agreement and not to apply civil nuclear sanctions on us if we undertake a test.” Such discretion—for that is all it is—of the USG of the day apart, all that our government of the day has to do is to have the desire and the will to undertake such re-negotiation—which the Congress-led UPA Government did not and let the country down badly. All that the GOI has to do is to threaten the US Congress and USG of the day that it will exclude the bids of the US aircraft companies, Lockhead and Boeing, from consideration in the GOI’s proposed purchase of US $ 9 billion valued 126 Multi-Role Combat Aircraft Tender!

Fourthly, “it (the 123 Agreement) does not mention (nuclear) tests”, says Balachandran. What is more, he goes on to say: “Again there can be no substantive improvement over the negotiated language.”(!!) This fallacious contention of his is untenable and wrong because he deliberately tries to treat the provisions and wordings of the Hyde Act and the 123 as if they are in separate watertight boxes with no inter-relations between them. The reality, as we all know, is that the 123 Agreement is a document derived from, and the dependent variable of, the primary, independent and over-riding US Congressional document which is the Hyde Act. The 123 may not mention the word “test”, but its wording in the last sentence of Article 14.2 deals with a major aspect of a test in elaborate detail barring merely the actual use of the word “test”. Secondly, the author knows fully well that were we to undertake a nuclear test all hell will break loose in the US Congress because Hyde specifies clearly that in such an event, all nuclear relations in and of all forms would have to be immediately terminated by USG and nuclear sanctions would have to be imposed by the USG on the GOI in terms of all prevailing US laws, not only Hyde, but the US Atomic Energy Act, the Arms Export Control Act, the NPT and the US Nuclear Non-Proliferation Act, to mention only a few. All that the last sentence of Article 14.2 does is to undertake a very poor attempt at verbal gymnastics carrying zero substantive content. So, as mentioned earlier, the re-negotiation would have to be with reference to the provisions relating to testing by us in all the US Acts listed above, without worrying about what the wording is in the 123 Agreement.

Fifthly, Balachandran then says: “finally assurances on fuel supply! The only (mine) sanction left for the US in the case of a test will be to withhold nuclear fuel.” He goes on to state dramatically: “No future Indian (he actually means US) Government can negotiate a 123 Agreement that promises unimpeded supply of nuclear fuel to India even if India were to conduct a test.” He then goes on to make the remarkably facetious in-favour-of India statement: “However, India can include sufficient penalties for stopping fuel (supply) in the commercial contract that it will negotiate for specific imports (of fuel) as it already has in the case of the (US origin) Tarapur reactors.”(!!)

My comments on these quotes are as follows seriatim. First, it is not “finally” the nuclear fuel supply issue. There are many more other issues that are involved and will have to be re-negotiated as indicated below. Second, it is rank naiveté to even propose in one’s wildest dreams that a “commercial agreement” with a US entity for supply of a governmentally owned and highly strategic material like nuclear uranium reactor fuel can be supplied by the concerned US Government entity—the US Department of Energy (containing the US Atomic Energy Commission) on terms which would involve it, that is, the US DOE accepting penalties for non-continuance of supply of such fuel when the very 123 Agreement which contains the same US Government’s fuel supply assurance has been terminated on account of a test by the proposed fuel recipient!! Indeed it is laughable! The real problem is US laws starting with Hyde, not some piffling “penalties imposed by the GOI” in a non-existent “commercial contract”!!

Sixthly, to come now to the “sensitive nuclear technologies and facilities” relating to: uranium enrichment, heavy water production and spent fuel (from reactors) re-processing to extract vital plutonium needed for our next generation, Fast Breeder Power Reactors. Balachandran argues that the provision by the USG to us of these “sensitive nuclear technologies and facilities (i) took Japan 10 years to negotiate their acquisition; (ii) that too under very intrusive and restrictive conditions in the US-Japan 123 under normal international safeguards by IAEA; and (iii) some of which were bilateral US administered safeguards, is just not worth the candle and so their de-facto denial under the Japan-US 123; and hence it is best to “postpone the whole issue of negotiations to acquire them”—even if indefinitely—begs the question as to why our MEA-DAE negotiating team kept insisting on their access to them in our 123? The formal answer is to give operational content to the provision of “full” Indo-US nuclear co-op as set-out and committed by both sides in the July 18, 2005, Singh-Bush Joint Statement. But then, as we already have all three such sensitive technologies, as a result of our own R&D over many years, why then include them at all in the 123 and receive the USG snub that the “USG may transfer GOI under the 123 Agreement itself pursuant to an amendment to that Agreement”? We could and should have deleted all references to them from Article 5.1 of the 123 text and in the Definitions Sections of sensitive technologies and facilities altogether. This is another important issue of re-negotiation, that is, just deleting them in toto!

Seventhly, the Sub-Article 6(a) of main Article 5 on nuclear fuel supply by the USG to us is so badly worded—consisting merely of a lifting out-of-date and so irrelevant fuel supply commitments by the USG to the GOI as worded in the Singh-Bush Joint Statement needs to be thoroughly “cleaned up” to make it contemporary and operational and needs to be re-negotiated to bring it up-to-date to the “frozen” 123 of August 1, 2007 including making US-origin fuel supplies tough, crystal clear and comprehensive without loose “expressions of intent” of fuel supply for all US-origin nuclear reactors for the 40-year lifetime of our 123, deleting totally irrelevant clauses such as sub-Article 6(b) and to eliminate the stupid, impractical sub-Article 6(b)(ii) relating to the IAEA and not the USG providing only what former has competence and ability to do, namely, provide an India-specific safeguards agreement and for the USG to provide in sub-Article 6(a) what is the nub of the whole Indo-US 123 and for which the USG has both the responsibility and capability, namely, stable reliable, uninterrupted and continued supplies of nuclear fuel for our reactors, for the life-time of those reactors. This also calls for renegotiation between the USG and the GOI, albeit of a lower degree of complexity and difficulty.

Eighthly, where is the need at all for Article 10.4 on Safeguards which reads: “If the IAEA decides that the application of IAEA Safeguards is no longer possible, the supplier (the USG) and the buyer (GOI)should consult and agree on appropriate verification measures”? So delete sub-Article completely as part of re-negotiation.

Ninthly, Sub-Article 14.4 in 123 deals with the thorny and totally unacceptable provision on the so-called “Right of Return” by us to the USG of “any nuclear material, equipment (that is, reactors) non-nuclear material or components, namely, spares for US-origin reactors imported/transferred (by the USG to the GOI) under this Agreement and any special fissionable material, that is, plutonium produced through their use, that is, the use of such reactors. This sub-Article is downright impracticable as US-origin, in-operation reactors, even if shut down immediately on Termination or Cessation, would be far too radio-actively “hot” to permit either the USG or GOI pulling them out of their foundations in India and “returning them” to the USA, assuming that the USG and US people would want to accept such “return”!! What it effectively means is for the GOI to be required to shut those reactors down immediately and in perpetuity, thereby causing untold dislocation to our electricity grids and downstream industries based till then on nuclear electricity for those US-origin reactors resulting in huge economic loss to the GOI of thousands of crores of rupees for all time. What we technically could and are mandated to do under this sub-Article is to: (a) return all fresh US-origin fuel with us, if any; (b) return all plutonium-containing fuel rods we have already produced in those US-origin reactors; and (c) all plutonium already extracted by us from such fuel rods. This is totally impractical for reasons indicated above and has to be toughly re-negotiated to delete it.

Tenthly, and relatedly, Termination and Cessation of cooperation dealt with in Article 14 contains a number of matters requiring re-negotiation: (a) Article 14.1 states “the Party giving notice of termination shall provide the reasons for seeking such termination”. Worded this way the “reasons” are global in character (could be a vote by the GOI against the USG in the General Assembly or any Specialised Agency of the UN or even an anti-American statement by a Minister of the GOI in our Parliament!! What is needed is to re-draft that clause as follows: “The Party giving notice of Termination shall provide the reasons for seeking such Termination, in terms of, and with regard to the specific provisions of, this Agreement.”

Eleventhly, and absolutely astonishingly, Article 14.2 states bluntly that “the Party seeking termination has the right to cease further cooperation under this Agreement, if it, that is, the USG (solely) determines that a mutually acceptable resolution of outstanding issues relating to such reasons has not been possible or cannot be achieved through consultations. The totally one-sided nature of the above wording is so evident that it does not need any elaboration or a case needs to be made for its deletion in toto through re-negotiation.

Twelfthly, Article 6 (iii) after according to the GOI by the USG, a totally gratuous “consent” (not right) the reprocess spent fuel and extract vital plutonium in the process, critical for fuelling our own built next phase Fast Breeder Reactors (FBRs) and to be extracted from the spent fuel from our first phase Thermal Reactors (TRs) like those at Narora in UP and Kakrapur in Gujarat, proposes the setting up of a “National” Reprocessing Plant (NRP) wholly financed, designed, built and operated and maintained by us, but, mandatorily put under IAEA Safeguards in perpetuity. What is more, for ensuring such safeguard and ability we have to supply all design and manufacturing drawings, technical data and calculations, computer model etc. to the International Atomic Energy Agency (IAEA) where it will be reviewed by non-Indian inspectors!—a massive in-road by foreigners into our most sensitive and highly classified and secret nuclear technology and plant!! But that is not all! The GOI is to agree to also comply with, the USG-origin highly intrusive so-called “arrangements and procedures” pertaining to the operation of the NRP! Indeed, our total submission to the USG goes still further. We have to sign a separate Agreement with the USG relating to those “arrangements and procedures” under Section 131 of the US Atomic Energy Act, and that USG-GOI Agreement has to be separately approved by the US Congress, along with a God-knows-what set of conditions, stipulations, restrictions and even deterrent sanctions to ensure GOI compliance in perpetuity(!!) which the US Congress may impose!! And all this after having invested on estimated Rs 10,000 crores of capital alone plus at least Rs 500 crores of annual operating cost on the NRP in perpetuity.

Are we at last done with the NRP? No, not by a long shot!! Why? Because after allowing all these monstrous intrusions and compromises of our national sovereignty and having made all the gigantic financial investments indicated above in an NRP mortgaged in perpetuity to the USA and the IAEA, we are required to agree under Termination and Cessation Article 14.9 of our 123 to giving the USG the unencumbered right to “suspend” the above referred “arrangements and procedures” in something called “exceptional circumstances”. Although 14.9 does state that these “circumstances” are to be “as defined by the Parties (namely, the USG and the GOI) after consultations”, why should we want to suspend those “arrangements and procedures” when we have gone to such lengths as indicated above to accept them, even with some modifications, and when we know that such suspension would lead to a (indeterminately long) “suspension of the operation”, that is, shutting down of the Rs 10,000 crore NRP! It would be the USG that would want the suspension of those “arrangements and procedures”, thereby bringing the NRP’s operations to an abrupt and indefinite standstill!!

All this shows that: (a) Article 14.9 has to be deleted in toto; (b) Article 6 (iii) on the reprocessing consent by the USG, the provisions/stipulations separately of the IAEA and USG have to be very drastically re-negotiated. This is particularly the case when all this is not even mentioned, let alone required, under the Hyde Act, which is the “mother” of our 123 Agreement with the USA!!

Finally, there is an appalling and total unforgivable goof on the part of the GOI’s negotiating team of not having any Arbitration Article at all. The Article 15 on “Settlement of Disputes” in our 123 merely states that any dispute concerning the interpretation or implementation of the provisions of this Agreement shall be “promptly negotiated by the Parties with a view to resolving that dispute”. The first elementary question which arises is: what happens if the dispute cannot be settled/resolved through negotiations/discussions? We are well and truly stuck because the entire agreement is totally silent on this crucial matter. What our negotiating team should have done is to get the USG to just incorporate in our 123 the elaborate Arbitration Article contained in the Japanese Government-USG 123 Agreement which took almost two years to negotiate but was finally accepted by the USG. It is an Arbitration Article and would have met all our requirements but that was not done. Why? Who is responsible? Should the government not fix responsibility on the concerned top officials of our delegation to the GOI-USG 123 Negotiations to bring him/her to book as lack of a compressive Arbitration Article will, in the years to come, arise again and again to make the inevitable differences and disputes that would occur during the 40-year agreement bring our 123 to prolonged halts, if not, suspensions and even cessation and further major concerns to the GOI of that much touted phrase “National Interest”.

To sum up, the contention of the author Balachandran that “no critic of the GOI’s negotiating posture can say, in public, with any degree of confidence, that they will be able to negotiate a better 123 Agreement on any of the specific points noted above”, is totally untenable. The 123 cries out for massive re-negotiation on the points set out above. It is not surprising that this is the case when, the entire process, from the very first round of the GOI-USG negotiations of the 123 started in early March 2007 and its completion at a break-neck speed in an appalling short period of five months, that is, July 31, 2007 when the 123s involving China, Japan and South Korea took years! This is not an “achievement” on our part. On the contrary, it is a reflection of the slapdash way in which the negotiations were concluded without even a single lawyer in the Indian team, not even the Addition Secretary and Head of the Ministry of External Affairs’ own Legal and Treaties Division, let alone legal experts from the Law Ministry or from other experienced arms of the Government of India, thereby resulting in a terrible product of scrambled eggs is something we now have to live with for 40-years—the life-time of the GOI-USG 123 Agreement! Who was the all-powerful man who allowed this to happen? The man who applied the by-now- notorious injunction onto the leader of our 123 negotiating team—our National Security Adviser M.K. Narayanan—on the night before the team left for Washington D.C. on the last critical round of negotiations with its USG counterpart in the last week of July 2007: “Narayanan, don’t come back (to Delhi) without the (123) Agreement (fully sown up).”

The author is a former Secretary to the Government of India in various Scientific Departments and Science Adviser to the late Prime Minister Indira Gandhi.

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