The focus should now shift to resolving the ambiguities of the 2010 Nuclear Liability Law. Without this exercise, India can only import nuclear fuel for the existing power plants; it will not be able to undertake the much-needed expansion of the nuclear power sector. It is not only the foreign suppliers who would like clarity on this issue; Indian vendors are equally concerned about its ambiguities
On June 22, the Narendra Modi government announced that the International Atomic Energy Agency (IAEA) Additional Protocol had been ratified. It is a welcome step marking the new government’s foray into nuclear diplomacy. However, by itself, it will not pave the way to the successful conclusion of negotiations with Westinghouse or GE or, for that matter, even AREVA. For that, more initiatives need to be taken, particularly if progress on the nuclear issue is to be registered during the Prime Minister’s visit to Washington.
India signed the IAEA Additional Protocol on March 15, 2009, over five years ago. It was one of the boxes to be ticked for implementing the 2008 India-U.S. Civil Nuclear Cooperation Agreement. But it was not a difficult obligation to fulfil because the Additional Protocol is customised for nuclear weapon states and this aspect had been successfully worked out by the Indian negotiators. It was left pending ratification because there were other, more difficult and more critical issues that needed to be tackled first, for which the political will could not be mustered in the last years of the United Progressive Alliance (UPA)-II government.
Addressing proliferation
To understand the Additional Protocol, it is useful to look at its genesis. With the end of the Cold War, the prospects of a nuclear exchange between the two superpowers receded and the proliferation of nuclear weapons became the new threat that needed to be addressed at a global level. In 1993, the IAEA began to consider how it could play a role in this and began a deliberative two-year exercise, described as 93+2.
The IAEA was already implementing full-scope-safeguards in countries that were party to the Nuclear Non-Proliferation Treaty (NPT) as non-nuclear weapon states. This meant that all nuclear activity in these countries was monitored to ensure that it was intended only for peaceful purposes. For the five nuclear weapon states recognised by the NPT (the United States, Russia, the United Kingdom, France and China), full-scope-safeguards were not applicable as these countries had a nuclear weapon fuel cycle that could not be subjected to international accounting and inspection by the IAEA. These five countries, therefore, worked out an understanding with the IAEA and accordingly, “voluntarily” placed some of their civilian facilities under a much looser IAEA safeguards agreement, more as a political gesture to demonstrate their good faith and provide credibility to the IAEA, which would otherwise be accused of only policing the nuclear have-nots.
The 93+2 exercise led, in 1997, to the Model Additional Protocol. The logic behind it was different — while full-scope-safeguards provided assurance that all nuclear materials were fully accounted for in exclusively peaceful activities, the Additional Protocol was intended to reassure that there was no clandestine nuclear activity being undertaken. Its purpose was to strengthen and expand the existing safeguards regime applicable to the non-nuclear weapon states. Remote monitoring and analysis, environmental sampling to detect traces of radioactivity, and inspections without notice, were introduced. In addition, the scope of declaratory activities relating to the nuclear fuel cycle was expanded, thresholds to trigger inspections were lowered, and imports (and exports) of dual-use items came under scrutiny. The prime catalysts for this were nuclear developments in Iran, North Korea and Libya, most of them easily traceable to Dr. A.Q. Khan’s freewheeling nuclear Wal-Mart. Once again, the five nuclear weapon states excluded themselves from the Model Additional Protocol citing national security considerations, but volunteered to conclude an Additional Protocol based on what could be shared with the IAEA.
Recognising Indian ambition
During the 1990s, with the tightening of export control regimes and the expansion of control lists to cover dual-use items and technologies, India’s access to these sectors was severely restricted. Therefore, after the 1998 nuclear tests and the declaration that India now possessed a nuclear arsenal, it was important for the Vajpayee government to demonstrate India’s impeccable non-proliferation record and as a responsible nuclear-weapon-state, seek its place in legitimate civilian nuclear commercial and technology exchanges. In the dialogues undertaken with major powers after 1998, France and later on, the U.S., were receptive to this ambition.
Prime Minister Manmohan Singh took forward the nuclear diplomacy of the Vajpayee government. Looking beyond the Next Steps in Strategic Partnership (NSSP), which was being implemented in phases in 2004, the breakthrough came in July 2005 during Dr. Singh’s visit to Washington, when it was announced that “the U.S. would work to achieve full civil nuclear energy cooperation with India”, “seek agreement from Congress to adjust U.S. laws and policies,” and further, “work with friends and allies to adjust international regimes to enable full civil nuclear energy cooperation and trade with India.” In turn, India agreed to “take on the same responsibilities and practices and acquire the same benefits and advantages as other leading countries with advanced nuclear technology, such as the United States.” These responsibilities included “signing an Additional Protocol with IAEA for civilian facilities.”
Not being party to the NPT, India was not subject to full-scope-safeguards. However, nuclear reactors set up with international cooperation (e.g. Tarapur 1&2, Rajasthan 1&2, and more recently, Kudankulam 1&2) were subject to the IAEA’s facility-specific safeguards. As per the 2005 undertaking, it was tacitly understood that as a nuclear weapon state, India would keep some of its facilities out of safeguards for national security reasons and there would, therefore, be significant differences between the Model Additional Protocol (as adopted by states under full-scope-safeguards) and the customised Additional Protocol that would apply in the case of India. In fact, the Indian Additional Protocol does not contain most of the Model Additional Protocol’s provisions and basically requires that India provide information to the IAEA regarding its nuclear-related exports. So much so, that even though India only signed the Additional Protocol on March 15, 2009, President Bush had certified to the U.S. Congress in September 2008 that India and the IAEA were making substantial progress in negotiating the Additional Protocol, thus clearing the way for the India-U.S. Agreement to be signed on October 10, 2008.
Quantifying liability
Ratifying the Additional Protocol was the low-hanging fruit but significantly, the decision indicates that nuclear diplomacy will remain a priority for the Modi government. The focus should therefore now shift to resolving the ambiguities of the 2010 Nuclear Liability Law. Without this exercise, India can only import nuclear fuel for the existing power plants; it will not be able to undertake the much-needed expansion of the nuclear power sector. It is not only the foreign suppliers who would like clarity on this issue; Indian vendors are equally concerned about its ambiguities.
We know how national and international nuclear liability laws have evolved and why liability was channelled exclusively to the operator. In the 1950s, only the U.S. had a nuclear industry and the U.S. private sector needed this protection in order to establish itself at a global level. Today, the situation is different and there is a growing feeling that this exclusive channelling is no longer helpful. The Indian law of 2010, which brings in the concept of supplier liability, may not be consistent with existing practice, but it is certainly much more in consonance with the spirit of the times. The idea of some measure of supplier liability is an idea that can no longer be bypassed. However, what the Modi government needs to ensure is that supplier liability does not become “infinite” or “open-ended.” What is necessary is a genuine effort to address the concerns of the suppliers’ community so that their liability can be quantified in a manner that does not raise costs to prohibitive levels.
The NSG waiver has enabled India to import nuclear fuel from multiple sources and improve capacity utilisation in nuclear power plants, but the ambiguities of the Nuclear Liability Law created a roadblock that UPA-II could not overcome. Dialogue with the U.S. lost momentum as did the quest for India’s membership of the Nuclear Suppliers Group. Mr. Modi is well placed, both at home and abroad, to impart a new momentum to the diplomatic process, thereby ensuring India’s long-term energy security interests, giving a push to India-U.S. relations, and getting India to its rightful place at the nuclear high table
