India’s nuclear fix

How things change! In 2008 when the Indo-US nuclear deal was signed and sealed — and was followed by the “clean waiver” to this country by the 45-nation Vienna-based Nuclear Suppliers Group (NSG) from all its restrictive guidelines — there were great expectations here of a speedy spurt in the installation of nuclear reactors with foreign collaboration and investment.

Four years later the picture is far less rosy. Indeed, it is no exaggeration to say that the much-needed expansion of India’s nuclear power industry could be gravely delayed, if not disrupted.
Both the nature and timing of the obstruction that has arisen could not have been more ironic. The first of the two nuclear power plants constructed by Russia at Koodankulum in Tamil Nadu (KK-1 and KK-2) is due to become operational in a matter of weeks, and the second a little later. In fact, both would have been functioning now but for an emotional but misguided agitation against nuclear power that was only partially the result of Fukushima. Since these units have been constructed under a 1988 Indo-Soviet agreement, this country’s Nuclear Liability Act could not be applied to them retroactively. In a joint memorandum signed by the two countries in 2008, Russians are to set up six nuclear plants at Koodankulum. The agreement on the third and fourth plants (KK-3 and KK-4) are, in fact, ready for signatures, and this is expected to be done during Russian President Vladimir Putin’s visit to New Delhi in October.
There is little time, therefore, for the Manmohan Singh government to decide on a thorny issue. The Russians insist that KK-3 and KK-4 are also spawned by the 1988 deal, like the first two plants, and are, therefore, exempt from the liability law. To the Atomic Energy establishment this was acceptable on the understandable ground that this is precisely the position of China, which is setting up successive nuclear plants in Pakistan at Chashma, claiming that the new installations are “grandfathered” by a Sino-Pak deal entered into long before China committed itself to any of the NSG guidelines. Some others in the government do not agree because the new plants will be built when the liability law is in force.
The Russians have two other arguments in their favour that cannot be dismissed out of hand as some tend to do. The first is that to change the original terms of the Indo-Russian 1988 agreement would render them uncompetitive. Imposition of the liability law would force them to incur huge costs of insurance though critics argue that to extend the exemption to four other Russian plants would make rival suppliers, such as the US and France, protest against unfairness and put our nuclear power plans into jeopardy. The second is that the only other foreign-supplied nuclear plant in this country at present is the Tarapore atomic power station. If under the 1963 agreement America and Canada want to set up a new reactor there, will they agree to be subject to nuclear liability?
The critically important point in this
connection is that the United States thought nothing of throwing the agreement and contractual obligations on Tarapore to the winds after the first underground nuclear explosion by this country in 1974. When New Delhi pointed out to the Carter administration that under the Vienna Convention on international treaties no national law passed retroactively can override an existing international agreement, the American side brushed it aside disdainfully. Had Russia not come to our help then and provided us with the fuel for Tarapore we would have been in the deepest
trouble.
Secondly, although India has been producing Russian military equipment under licence since 1960s the Russians never felt the need to put these arrangements under the Intellectual Property Law. This was done only after we entered into military cooperation with Israel. All previous collaborations are exempt.
To talk of the resentment in the US against the Indian liability law would be to stress the obvious. Washington and the American nuclear industry that were looking forward to partaking of the lucrative Indian nuclear market have been expressing their feelings bluntly. They say that the obligations the Indian law places on foreign suppliers are unfair and, in any case, not in consonance with the international convention on the subject that India is willing to sign. They make no bones about their demand that the Indian law be diluted. They ought to know that in a country still shuddering because of the Bhopal Gas Tragedy no Parliament would agree to water down this legislation. Nor have the hopes of the suppliers’ concerns being addressed by the contracts signed with the Nuclear Power Corporation of India Limited (NPCIL) proved realistic.
The other side of the coin is that the rejection of the Russian request on KK-3 and KK-4, and possibly KK-5 and KK- 6, would greatly annoy Russia and create a major crisis in a crucial relationship. Our relations with the US and France are equally important. It is virtually a catch-22 situation.
It is in this context that the Prime Minister has asked the law ministry to clarify the exact legal position about the Russian demand that, like KK-1 and KK-2, the next two nuclear power plants at Koodankulam should also be exempt from the liability law. The ministry has to give its verdict in a matter of days, and no matter what the final finding, it would place the government in a very tight spot.
Does this mean that all the plans about the expansion of the country’s nuclear programme should be rolled up and put aside? Not really. All the three major powers involved know that India is a responsible nation. All of them also have a stake in investing in the Indian nuclear industry. The real problem will be that in a country where things move at a snail’s pace even at the best of times, the delay may become unconscionable.