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Contentious issues of the nuclear deal signed in 2008 have finally been resolved. It waits to be seen what the fine print of the liability law is before a thumbs up sign can be given [/h2]

By Seema Guha

The torturous process of operationalizing the complicated India-US nuclear deal is now complete. Prime Minister Narendra Modi and US President Barack Obama have finally broken the logjam, which had prevented US nuclear corporations from taking advantage of New Delhi’s invitation to build reactors in India.

The nuclear deal, as Modi said at the joint news conference, is the centerpiece of a transformed relationship between the world’s largest and oldest democracies.

Yet, the process has been an arduous one, leading to highs and lows ever since July 2005, when an agreement was signed in principle by former Congress Prime Minister Manmohan Singh and former Republican President George W Bush. In October 2008, Bush signed the “123” enabling legislation with bi-partisan support in the US Congress. This was a major step forward, as the deal was nearly torpedoed by those who believed India should remain a nuclear pariah for its refusal to sign the Nuclear Non-Proliferation Treaty and the nuclear tests it conducted in 1998.


In August 2008, the International Atomic Energy Agency (IAEA) approved the safeguards agreement and in September 2008, the Nuclear Suppliers Group (NSG) approved it, but not without the US browbeating member states into compliance. Despite reservations from countries like China, the NSG finally gave in to US pressure. And in October 2008, Pranab Mukherjee, the then foreign minister, signed the civil nuclear agreement with US secretary of state, Condoleezza Rice.

While George Bush did his bit to get India out of its nuclear isolation, Manmohan Singh too risked losing his coalition partners by insisting on the civil nuclear agreement with the US. The Left Front, which had lent outside support to the UPA government, withdrew support. Despite the euphoria over getting through the landmark civil nuclear agreement, the situation on the ground did not change.
The Prime Minister, Shri Narendra Modi in ?One on One? Talks on the tea with the US President, Mr. Barack Obama, at Hyderabad House, in New Delhi on January 25, 2015.

 Growing rapport between the two leaders

India has much to be grateful to George Bush. The nuclear deal accompanying the NSG waiver opened the floodgates for not just nuclear co-operation with the rest of the world, but more important, for high-tech, non-nuclear items and cutting edge techno-logy. “It is a feeling of liberation, getting out of the stranglehold of the trade sanctions, which really stymied our progress for several decades,” Arundhati Ghosh, former diplomat, who was part of the Comprehensive Test Ban Treaty (CTBT) negotiations in Geneva, ex-plained at that time. Perhaps most people did not understand the crippling effect of the denial regime the world had imposed on India. It was a denial of everything which could have a potential for dual use, whether in medicine, engineering, information technology or the works.


The US, which helped India overcome the international sanctions which had crippled its nuclear power potential, wanted its private companies to profit from an agreement which it had made possible for India. But this was not to be. Opposition parties, supported voci-ferously by BJP leaders Sushma Swaraj in the Lok Sabha and Arun Jaitley in the Rajya Sabha, brought in the Civil Liability for Nuclear Damages Bill in 2010. This allows the operator to sue the supplier in case of an accident, inviting protests from US companies. The Congress-led UPA could not withstand the onslaught of a joint opposition and passed the bill, which led to US companies refusing to do business with India. 

As per Census 2011, there are 7.7 crore senior citizens in India, which is 7.5 percent of the total population. By 2026, the number of elderly is expected to rise to 17.32 crores, according to the Department of Social Justice.

Since then, Indo-US ties have been in limbo, as the US felt let down that its nuclear power houses were not able to get a large piece of the nuclear pie on which India had promised to spend billions of dollars. Instead, old friends Russia and France, despite problems of their own with the liability bill, were inking deals with New Delhi.

JUNE 8, 2007 - Heiligendamm : Prime Minister Manmohan Singh and US President George W. Bush share a light moment while posing for a photo at the G-8 Summit in Heiligendamm, Germany on Friday.

(Right) US President George W Bush and Prime Minister Manmohan Singh had worked hard to
ensure the civil nuclear agreement worked


But on January 24, Modi and Obama salvaged the situation by working around the two thorny issues. In fact, Indian and American officials established a contact group in 2014 to look at these problems during Modi’s first trip to Washington. 

Obama finally used his executive powers to ensure that instead of American intrusive tracking of every bit of fissile material supplied by it, the IAEA would monitor and track the material used by India in its entirety. New Delhi is satisfied that this will not entail intrusive and cumbersome monitoring. 

Jaswant Singh (6)

The first steps to transform Indo-US ties began after India’s nuclear tests of 1998 when Jaswant Singh and Strobe Talbott set the ball rolling.

Officials also worked round the deal-breaking Liability Law. While the law passed in parliament remains intact, the government will set up an insurance pool for the first few years to help create the fund required in case of an accident, where the Indian law makes the suppliers also liable. Making suppliers also pay is not part of international practice and global insurance companies refuse to provide this type of insurance to any reactor supplier. 

The government, which contributes to this fund, will also earn a premium on its investment. After all, nuclear accidents do not happen that frequently. Operators anyway pay around one million dollars per year for every project they take on. This is in conformity with international best practices and will make it easier for other countries to build nuclear power plants in India. This is the way out of the logjam that the two political leaders have been able to resolve. But all this is in principle and remains to be worked out. The devil is in the details.

“The deal was wrapped up in 2008. What we have today is an approach to resolving the issues arising out of the Liability Law,’’ explains former foreign secretary Lalit Mansingh. He says that while representatives of nuclear power corporations were part of the contact group negotiations which met since 2014, in the last meeting in London to resolve these issues, the companies were not included. So they have to look at the fine print and give the thumbs up.


The problem of nuclear accidents has more or less been resolved with the `1,500 crore or so investment the government will make to the insurance pool. Mansingh believes insurance companies will have no problems with that. The other problem is that the Liability Law allows any Indian citizen to go to court and sue the nuclear vendors for damages arising out of real or perceived injury from nuclear plants. India has promised to again work round these issues. But the insurance and rea-ctor corporations have to be convinced they do not get into huge problems of litigation. 

Considering that there is political backing at the highest level to make the civil nuclear deal operational, there is optimism that American multinationals will begin to explore the option offered by India. After all, there are billions of dollars of business that the reactor companies will make as New Delhi is keen to include clean nuclear power as part of its energy mix for the future.

As the Congress and the BJP wrestle to take credit for the deal, the plain truth is that the first steps to transform Indo-US ties began after India’s nuclear tests of 1998. The then foreign minister Jaswant Singh and US deputy secretary of state Strobe Talbott set the ball rolling, but it was left to the UPA government to really push for the deal. 

Ironically, the BJP in opposition joined hands with the Left to bring in the Liability Act, which, it knew very well, was a deal-breaker. Perhaps the party never believed it would come to power so soon. Luckily for Modi, who was chief minister of Gujarat then, he was not part of the nuclear stand-off in parliament.

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