Indo-US Nuclear Energy Cooperation Has it lost momentum after the 2008 Nuclear Deal?

R. Rajaraman

Emeritus Professor of Physics

J.N.U., New Delhi

and

Co-Chair, International Panel on Fissile Materials

Let first thank Dr. David Jhirad for inviting me to

talk to this distinguished group and Dr Anshul

Rana for his courtesy and logistical help.

This talk is about how things have progressed

on US-India nuclear cooperation since the 2008

Nuclear Agreement.

Let me first recapitulate, for completeness and

to refresh your memory, the main features of

the Nuclear Agreement (The Deal, for short)

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The Deal in a nutshell There had been some serious efforts even during BJP led

government pre 2004. But the cooperation did not take off until the Indian PM Dr.Manmohan Singh’s visit to the US and his meetings with President Bush leading to their joint statement of July 18, 2005,

The nuclear component of the joint statement called for India to separate its nuclear facilities into civilian and military categories and place the former under IAEA safeguards.

(Until then our nuclear weapon making facilities were intermingled with our civilian energy producing reactors. Most were NOT safeguarded)

In return the US would

(i) resume full civil nuclear energy cooperation with India (at that time forbidden by their laws)

(ii) work with the US Congress to enable such cooperation

(iii) persuade allies in the Nuclear Suppliers’ Group to lift their sanctions against India

Stages of Implementing the Deal

(3 long years) Negotiating the Civil-Military Separation Plan (

Fall 2005 - March 2006)

The US executive taking that plan to the US Congress to seek exemption from the ban on nuclear commerce with India. The Passage of the Hyde Act (rest of 2006)

Hammering out the 123 Agreement (2007 Spring)

The political debate in India– when the government nearly fell (2007-08)

The IAEA safeguarding Agreement July 2008

The NSG clearance (summer 2008)

The US Congress approval of the 123 agreement. Signed into law by US Pres. (end of 2008)

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The Civil-Military Separation Plan . After over 6 months of heavy negotiations it was agreed that the following facilities would remain outside safeguards

8 of the India’s 22 power reactors ( 2350Mwe; roughly

one-third of the total capacity) .

The Pu production reactor Dhruva (100 MWth)

The Prototype Fast Breeder Reactor (500 MWe)

All Pu Reprocessing plants (100+100+50 tons/yr)

Uranium Enrichment plant (~5000 SWU)

All the spent fuel stocks until safeguards take over and

from all unsafeguarded reactors

The production reactor Cirus (40MWth) would be shut

down

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Progress since the Deal was signed In one sense, the 2008 Deal and the various legislations that

accompanied it are formally ends in themselves.

Washington kept its end of the bargain. The Hyde Act and the

123 Agreement with India were pushed through the Congress,

and the NSG persuaded to unanimously vote to lift nuclear

sanctions against India.

So did India. The Civil-Military Separation process is on. A

safeguards agreement has been signed with IAEA and all

civilian reactors placed under IAEA safeguards. The

contentious reactor Cirus, built long ago with Canadian

cooperation has been closed down.

All new reactors will be designated as civil or military . So far

only civilian reactor plans have been announced—all to be

under IAEA supervision.

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Further Progress Depends on which front you are talking about. There was more

than one motivation behind the Indo-US nuclear Agreement.

From the Indian viewpoint one big motive was to have the

crippling nuclear sanctions lifted, so as to be able to buy

requisite stocks of Uranium.

India has far too little indigenous Uranium ore to meet the

ambitious goal, declared by various government spokesmen,

of generating 30-50 GWe of nuclear power by 2030.

Our Uranium ore is limited and not of the highest quality.

Estimates of the total Identified Resources in India vary from

78,000 to 1,18,000 tons. (The Red book)

But, if you plan to increase nuclear energy capacity up to

50,000 MWe you will need about 7000 tons a year.

Clearly we do not have enough U ore even under the ground

for supplying so much fuel even for 15 years. We would have to

import large quantities of U

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The Deal allowed India to import Uranium

Agreement to make purchases of U with Kazakhstan,

Namibia, Mongolia, Niger, Canada, (Australia ??)

Strengthening India strategically to offset China.

Denied vehemently by India and the US, but everyone

knows that this has happened to some degree. India’s

stature as a responsible non-proliferating nuclear

power has gone up vis a vis China, especially after the

latter’s sale of reactors to Pakistan.

India became a part of ITER

Sanctions against transfer of technology in many

sectors lifted although India is worried about the NSG

strictures against transfer of enrichment and

reprocessing technology

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Sale of US reactors Note that there was no explicit requirement in the 123

Agreement that India purchase US built reactors.

Indeed I do not agree with some Indian cynics that the primary

motivation on the part of the US was commercial: reactor sales.

Rather it was the geopolitical and strategic value of increasing

cooperation with India. Recall that India, a large democracy

next door to China, was also (at that time !) enjoying rapid

economical growth.

But it was understood from the start that an additional benefit to

both nations would be the prospect of US firms building some

reactors in India

It was also clear that not only the US, but other countries would

also benefit from commerce with India– especially France and

Russia, although it is the US that did the heavy lifting at NSG

and the US Congress

I consider this a major act of statesmanship by President Bush.

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Agreements with Westinghouse and GE

Progress on reactor building agreements was fast in

the immediate aftermath of the Deal.

The ink had barely dried on the Indo-US 123

Agreement in October 2008 when, by March 2009, GE

Hitachi (GEH) had signed MoU s with the Nuclear

Power Corp of India Ltd (NPCIL) and Bharat Heavy

Electricals Ltd (BHEL) to prepare for the construction

of Advanced Boiling Water Reactors.

Also, on the construction of AP1000 Pressurized

Water Reactors (PWRs) Westinghouse and the NPCIL

signed an ―Early Works Agreement‖

Caution: Nuclear Cooperation with Japan yet to be

completed.

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GE Hitachi and Westinghouse are expected to build six of their

BWR and five AP1000 reactors respectively at Mithi Virdi in

Saurashtra (Gujerat), and Kovada in Andhra Pradesh.

[Meanwhile Jaitapur in Maharashtra state has been reserved

for six French EPR units 1650 MWe apiece, while Haripur in

West Bengal was to house eight 1000 MWe Russian VVER

plants]

There seemed to be plenty of room for everyone and no

frenetic competition between the three major reactors building

nations for contracts. The type of reactors and their costs being

different in each case, negotiations with each supplier could be

conducted separately.

So everything looked hunky-dory until two developments took

place :

1. India’s Nuclear Liability Bill

2. The Fukushima Tragedy

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Nuclear Liability Bill In August 2010, the Indian government approved the Civil

Liability for Nuclear Damage Bill.

Its discussion in the Parliament coincided with the 25th

anniversary of the Bhopal Gas tragedy. The overwhelming

public opinion was that the victims of that chemical factory

tragedy were not adequately compensated, the Indian

government was slack and that Union Carbide had ―gotten

away with murder‖.

The discussion of the Nuclear Liability Bill took place in the

shadow of Bhopal . The government had also expended much

of its political goodwill and combative strength while pushing

through the Nuclear Deal a few years back.

It capitulated to populist anti-US sentiments that it should not

once again ―sell out to US capitalist interests‖ by letting

American companies off the hook with a ―lenient liability law‖.

That France and Russia were also involved scarcely figured in

the debate

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The Bill had several progressive measures including reactor operator liability of $300 million and a requirement that a claim for compensation by a victim will have to be dispatched within 3 months of application and the award accordingly made .

But it also contained a clause permitting the operator to sue the reactor suppliers:

…[the operators have 'right of recourse' against equipment suppliers if], as per Clause 17 (b) and (c) "the nuclear incident has resulted as a consequence of a willful act or gross negligence on the part of the supplier or act of commission or omission ..with the intent to cause damage‖.

On the surface, such supplier liability may sound reasonable, for, if indeed it can be legally established that their actions led to the accident, they should pay the penalty.

But no other nuclear country includes such a condition

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CSC As per the most recent international instrument

adopted, the Convention on Supplementary Compensation (CSC), the operator will be fully responsible for all liability in case of a nuclear incident

The convention does permit national laws to provide the operator with the right to recourse only "if it is expressly provided for by a contract in writing" or if the incident "results from an act or omission done with an intent to cause damage".

The Indian legislation, however, goes beyond this. It also states that the operator can exercise this right if "the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services".

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India’s Liability Law does not conform to the mandatory stipulations in the CSC Annex, since it contains Clauses 17(b) (right to recourse) and 46 in addition to all other laws)

However India had promised to the US as far back as in September 2008 to sign the CSC

And signed it in October 2010 despite these apparent conflicts with our Liability Bill.

India is also under pressure to ratify the CSC even though most of 48 US 123 agreement partners had not even signed it.

But even after ratification, India’s eventual entry into the CSC may be held up, because of these contradictions

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Rules for the Liability Act Not unexpectedly, all the suppliers from the US, France and

Russia were unhappy with the supplier liability clause

In an effort to allay their concerns and to reduce conflict with CSC, the government notified a set of ―Rules‖ (guidelines) for the operation of the Liability Bill, on November 11, 2011. It mitigated the Liability penalty quite a bit and clarified that:

The provision for the right of recourse (from the supplier) shall be for ―the duration of initial license issued under Atomic Energy (Radiation Protection) Rules 2004 or the product liability period, whichever is longer". The former is typically 5 years and the latter 1 year. This is much shorter than liability for the entire life of the reactor.

Since the maximum liability of the operator is Rs1,500 crore (US$ 300 million) as per the Act, Rule 24(1) states that the right of recourse from the supplier can in no case exceed that amount, whatever be the contract value ($4-6 billion ?)

The operator's claim shall in no case exceed the actual amount of compensation paid by him up to the date of filing such claim.

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What next? That is not the end of the Liability story.

The appropriate committees of the Indian parliament had taken up the Rules for discussion. Opposition parties had introduced some amendments to restore some of the more stringent spirit of the Liability Bill.

Thus far these amendments haven’t been passed by the parliament either.

There are also legal issues regarding whether the rules ―carry out the purpose‖ of the original Act and whether the Act itself conflicts with the CSC.

So the precise legal situation is murky. But it may be sufficiently murky that savvy lawyers can squeeze out sufficient legal space to enable foreign companies to agree to build reactors in India. After all tens of billions of dollars and three major nations are involved!

So the commercial aspects of US–India nuclear cooperation may still bear fruit.

Meanwhile India and the US have recently made much progress on the arrangements and procedures on reprocessing the spent nuclear fuel of American origin

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Reverberations of Fukushima As you know , the Fukushima reactor explosions had a massive impact

(much more than Chernobyl) on public perceptions of nuclear energy.

The nuclear industry, hoping to enjoy a ―nuclear renaissance‖ in last few

years because of climate change concerns, had instead to face charges of

being unsafe and too expensive. Anti-nuclear activists worldwide felt

empowered and demanded closure of nuclear reactors.

Different countries responded differently – a story unto itself. Germany,

Japan, the US , the UK...In India the government conducted a full safety

review and decided to continue with its plans for further expansion.

But activists organized major protests against the proposed new reactors ,

especially at Kudangulam where two Russian built reactors were getting

ready to be commissioned – surprising since traditionally in India protests

were rarely aimed at Russian built facilities (power of Fukushima and the

collapse of cold war behavior patters).

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Earlier, another site allotted to the Russians at Haripur

in W Bengal may have to be relocated because of the

opposition of the local political party

Similarly Areva’s EPR reactors planned at Jaitapur on

the west coast has been met with considerable local

opposition. Protests were organized during President

Hollande’s visit to Delhi.

But the sites offered to the US are far more robust ,

located in business-friendly states, namely, Gujarat

and Andhra Pradesh. Some protests started in both

these places but not gathered full strength.

However the Saurashtra plant has drawn some

criticism since it falls in the seismic zone III, where a

major quake killed thousands in 2001.

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While the US reactors have been subject to fewer

protests, one problem that India is going to face in

any of its nuclear expansion projects whether with the

US, Russia or France will be public protests from a

mixture of environmental, radiation and human

displacement concerns.

I personally believe that the real driving force behind

such ―not on my backyard‖ protests is not nuclear

hazards, but the loss of livelihood of the local people,

and inadequate compensation and support for those

displaced,

although after Fukushima protesters have found the

argument of nuclear hazards to be a valuable cover

for drawing attention to their plight. 20

In fact this problem is common to all major new

projects requiring large tracts of land– whether

they be river dams ,car factories or Copper

mines. It is a problem to which the government

has to find a uniform, fair solution. It is in the

process of coming to grips with this and

proposing new legislation .

Meanwhile these public protests will perhaps

slow down nuclear collaboration with the US

and they will not prove fatal.

The unresolved Liability issues and reactor

costs are the more serious obstacles . 21

THANK YOU

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Expectations on the Diplomatic front On cooperation with the US on other non nuclear

fronts, there is a feeling in some American quarters

that India has not allied itself more closely with the US

position on International issues.

Votes on Iran

joining the NPT ? How? As a weapon state or a non

weapon state?

China; India has not taken on China sufficiently

aggressively and is playing it cute, balancing relations

with both the US and China

The distinguished analyst Ashley Tellis calls this balancing act

with China Nonalignment 2.0, reminiscent of Non alignment1.0

during the cold war. But there are big differences 23

Even if we end up conducting a test, say, 10-20 years from

now, and even if the Deal were to totally break down as a

result, we will be no worse off then than we have been had

there been no Deal at all.

For decades we have been under siege because of

technological sanctions. The Deal will at least permit us, for as

long as it lasts, to enjoy the benefits of international nuclear

commerce and technical interaction.

Needless to say, we should take prudent precautions, at the

time of contracting to buy individual reactors from other

countries, to ensure against being left holding a large un-usable

bunch of reactors because of discontinuance of fuel or spare

parts.

In any event the option of whether to conduct a test or not will

be entirely ours, after taking into account all its consequences,

of which losing nuclear commerce may not be the most serious.

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The effect of the Deal on quantity, i.e. the size of

India’s nuclear arsenal, needs to be discussed in

quantitative detail, since dire consequences on this

front had been prophesized by the Deal’s critics. This

concern is related to the Deal’s impact on the

production of Plutonium (Pu), on which India’s

weapons program is based. Unlike Uranium, Pu is not

available under the ground to be mined. It has to be

produced artificially in nuclear reactors, where some of

the parent uranium fuel is converted to plutonium

under the impact of neutrons in the reactor

environment

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Impact on weapon usable Fissile material capacity

Reactor CIRUS

(Until

2010)

Dhruva Breeder

(after

2010)

Spent

already

TOTAL

stocks

Weapon

Eqwt

Cumulative

prodn (kg)

till (Jan 2008)

342 437 - 130 ~649 130

Annual future

production (kg)

9 20-25 135 ~ 160 32

The Separation Plan agreed upon in March 2006 was a major

negotiating victory for India. Not only the Breeder but 8 other

Candu type reactors were allowed to remain outside safeguards.

That provides plenty of weapon-grade fissile material.

Caution: These are upper limits at 70% capacity factor

In addition 12 tons of Reactor Gr Pu in spent fuel Concerns that the Deal will undermine our “strategic capabilities”

have no validity unless you want much more than a minimal deterrent

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