Friday, February 06, 2015

India-US nuclear deal: "Complex" legal issues suggest it wasn't a breakthrough, says Washington Post

By Our Representative
Premier US daily "Washington Post" has quoted American officials, analysts and experts to say that the claimed nuclear deal with Prime Minister Narendra Modi, arrived at during President Barack Obama's recent India visit, cannot be characterised as a breakthrough, as "legal issues remain so complex that private US companies may continue to shy away from new deals in India, despite the developing country’s fast-growing and dire power needs." 
Jointly penned by Annie Gowen, the paper's India bureau chief, and Steven Mufson, in Washington, it says, latest information from the Government of India suggests the deal has not paved the way "for US firms to sell nuclear reactors to India".
While the deal's details remain sketchy, the paper says, on Wednesday, Indian officials cited three key elements of the agreement: "The establishment of an insurance pool to cover nuclear operators and suppliers for up to $250 million in damages; a nonbinding legal memorandum asserting that Indian liability law is consistent with international norms; and a new system of reporting on the status of nuclear fuel and other materials supplied by the United States."
Taking exception to the Indian liability law, the paper quotes anonymous White House officials to say that the deal is "not a signed piece of paper", but just a "process that led us to a better understanding of how we might move forward”. It underlines, "The key issue will be whether the conflict between international and Indian law can be waved away by a memorandum from India’s attorney general".
It quotes a Washington lawyer familiar with the issue to say the any new contract to supply reactors would have to clearly mention that "the 2010 liability law doesn’t mean what it says."
The paper insists, the "real test" of the deal will be when the US and Japanese companies "sign commercial contracts with the Nuclear Power Corporation of India. Already, Jonathan Allen, a spokesman for General Electrical (GE) Hitachi Nuclear Energy, which has a tieup for Kovvada (Andhra Pradesh), has said it  looks forward “to reviewing the governmental agreement.” 
The paper suggests that review will be taken in the backdrop of how how, in 2010, the Indian Parliament passed a "strict liability law that angered many in Washington and effectively stalled efforts by companies such as Toshiba’s Westinghouse Electric and GE Hitachi Nuclear Energy to sell materials or partner to build nuclear power plants in India."
Pointing to another "obstacle" that remains intact, the paper says, it is "the requirement in the Hyde Act of 2006 that the Indian government and an independent auditor annually provide information about the form, amounts and location of any uranium supplied to India to make sure it is not diverted for military use." 
While Obama officials said that "the two sides came up with a tracking system specific to India that will rely heavily on a series of information exchanges", the paper believes, US' nonproliferation experts remain concerned.
"India’s first nuclear reactor dates to 1956; the country has 21 reactors at seven power plant sites", the paper says, emphasizing, "The United States and Canada withdrew support for the nuclear program after the country exploded a nuclear device in 1974, and the United States and Japan imposed sanctions after the 1998 tests. Members of Congress will want to be sure that India cannot skirt the Bush-era legislation and did not simply wear down American negotiators to achieve the present agreement."
Already, the paper says, House Foreign Affairs Committee chairman Edward R. Royce (R-Calif.) has said in a statement that “to get this contentious issue off the table, the Administration simply signed off on the same measures taken by India that the Administration had previously said were unacceptable”. It comments, "Even if the thorny details of the liability question are worked out — a big if, analysts say — American companies still face the political realities of India."
It adds, "Although the government concedes that nuclear power must remain part of the country’s energy mix, particularly to counter rising greenhouse gas emissions, nuclear power plants remain unpopular with local residents, and acquiring land to build plants can take years." 
It quotes MK Bhadrakumar, a former Indian ambassador who is now an analyst, that the “breakthrough” touted by Obama and Modi "may end up being more of a diplomatic success than a commercial breakthrough".

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