Report of IPCS Seminar held on 11 September 2008

Chair: Amb Lalit Mansingh, Former Ambassador, United States
Speaker: Siddharth Varadarajan, Strategic Affairs Editor, The Hindu

Lalit Mansingh

The NSG waiver, although historic, flags four important issues that need to be discussed. First, the ferocity of opposition posed by some members of the Nuclear Suppliers Group (NSG) in the first meeting on 21-22 August, which took India and even the US by surprise. Second, there is no clarity on why China made some clumsy maneuvers, which is very unlike Chinese diplomacy. Third, the role of the Americans during the first meeting indicated that they were trying, very subtly, to get India to accept certain restrictions. This despite the active role they played in getting the NSG waiver through. Fourth, where do we go from here? What does it mean for India? How soon can India expect new reactors and fresh fuel to come in?

Siddharth Varadarajan

The NSG was set up in 1975 in response to India's Peaceful Nuclear Explosion (PNE) at Pokharn in 1974. Starting with seven countries, the NSG was founded as the 'London Club' and its first meeting was held amidst great secrecy. The objective of this superpower collaboration was to get every country to sign the NPT and tighten the rules governing nuclear commerce for countries outside the NPT. The NSG began with some rough guidelines, more or less in line with the Zangger Committee procedures and did not prohibit nuclear commerce with countries that did not accept full-scope safeguards or those not party to the NPT. In other words, at the time of NSG founding and even after, there was nothing in the NPT and nothing in the NSG rules which prohibited the sale of nuclear reactors and nuclear material to a country which was not party to NPT or to a country which did not accept full-scope safeguards, such as India. The only condition was that the imported materials would be subjected to IAEA safeguards.

The Gulf War and revelations of the Iraqi nuclear weapons programme led to tightening of the rules in 1992. More importantly, the US and other countries saw the end of the Cold War as a possibility of pushing the remaining countries to accede to the NPT. Tightening the rules of nuclear commerce was, therefore, perceived as one way to pressurize countries into accepting the NPT. The NSG remained dormant from 1975 to 1992 and at the Warsaw plenary in 1992, the NSG adopted full-scope safeguards as a condition of supply for nuclear sales to any country. Thus, it was the end of the road for New Delhi for nuclear imports - materials, components and fuel.

On 18 July 2005, the US undertook to work with its friends and allies to adjust international regime to allow full civil-nuclear cooperation with India, which was a clear reference to the NSG. The first manifestation of this commitment was a pre-decisional draft circulated by the US in March 2006. It was a statement for civil-nuclear cooperation with India addressed to all NSG countries envisaging a certain framework within which the NSG's guidelines would be adjusted to get rid of the embargo on India. However, India was unhappy with the provisions mentioned and certain prescriptive language in the draft that suggested the NSG members would continue to abide by the goal of India eventually accepting full-scope safeguards.

The NSG proceedings became dormant after the first draft (Rev.0) of March 2006 because both India and the US were occupied with the 123 Agreement and following the collapse of political consensus in India from August 2007, the NSG part of this nuclear puzzle was put on hold. The US and India seriously began to engage each other on the nature and form of the NSG waiver only after the UPA government won the vote of confidence and when it became clear to both that the safeguards agreement with the IAEA would be pushed. Given India's displeasure with the March 2006 draft, difficult and complex negotiations took place in the run up to the 21-22 August meeting, where India eventually got a clean and unconditional draft. The provisions of this draft (Rev.1) satisfied the concerns of all stakeholders on the Indian side. The US, however, was uncomfortable and unhappy about this draft, making it amply clear that the draft is unlikely to be passed at the NSG meeting. It was clear even then that there would be a second round of discussion.

The Americans were not surprised by the ferocity of opposition on 21-22 August. Indians felt a deep sense of betrayal on the eve of 22 August when the meeting collapsed and it became clear that they were far from reaching a consensus. Indians came back from the meeting with a distinct feeling of having been played by the Americans. The Indian Foreign Secretary made it clear to the Americans that there was no political space for India to adjust the draft any further. The Americans, however, were of the view that having staked his government, Manmohan Singh's political stake in the success of this deal was much greater and hence they believed there was space (to adjust the draft).

The August 21-22 draft was torn up and a new draft to be considered by the NSG on 4-5 September was prepared. The Indian officials were shocked when the first version of this draft (Rev.2) arrived in Delhi at the end of August. It embodied a number of conditions held out by non-proliferationists within the State Department. The negotiation over the third draft (Rev.3) was by far the hardest ever with the US in the past three years. India rejected Rev.2 and managed to keep conditions specified in this draft out of Rev.3, and this was circulated to the NSG members on 1 September. This draft represented a significant advance (from the earlier draft) with assurances that India would abide by its non-proliferation commitments. In many ways, it incorporated the spirit of many of the suggestions made in 21-22 August meeting, even though it did not have the tight formulations that members like Austria and Ireland were pushing for.

However, on the eve of the NSG meeting, the 26-page letter (Berman letter) written by the State Department to the House Foreign Relations Committee addressing questions on the State Department's understanding of the 123 Agreement was released. This letter was significant to the NSG meeting because it indicated that the US was subscribing to a much tougher standard of cooperation and termination with India than it was expecting the NSG to do as reflected in Rev.3. This formed the core around which the "Group of Six" (G-6 countries) mounted their attacks. By the afternoon of 4 September, it became clear that the charge would be led by the group of six - Austria, the Netherlands, Ireland, Switzerland, New Zealand and Norway. Japan provided them extensive support and subsequently it became apparent that China also joined them, initially in a quiet way but subsequently in a more pronounced manner.

The Indian officials saw the domestic impact of the Berman letter as essentially reducing even further the possibility of any room for compromise. It was very clear that if the waiver does not come through in a form that is suitable to India, there was simply no political space in India that would permit further negotiations. The Americans, once again, read this as yet another reason why Manmohan Singh would settle for a waiver at any cost. According to them, the Indians were more vulnerable to accept changes because they knew that the UPA government badly needed this success at Vienna.

The meeting resumed on 5 September; the US sat with groups of countries to try to whittle down the number of objections and come up with language that is acceptable to both the objectors as well as India. By 11:30 pm Vienna time, India and the US agreed on a final draft which was frozen. The Indian officials refused to accept a number of changes. Once it became clear that the Indian officials were not going to accept any more changes, the Americans realized that insisting on changes at this stage would either lead to the Indians walking away or the NSG going into a third round of meeting. All stops, therefore, were pulled out to ensure that this frozen text be passed come what may. This was when the might of American diplomacy came to be deployed, which the Indians had expected would happen with the original draft (Rev.1) on the 21-22 August meeting. More than twenty phone calls were made at the highest level involving both President Bush and Condoleezza Rice.

The Netherlands and Norway were the first to come around; the letter issued by the Indian External Affairs Minister (EAM) on 5 September was the decisive factor for them. Many countries latched on to this letter and insisted on making a reference to this in the NSG waiver. The text was tabled at the plenary on 6 September at 2.00 am Vienna time. However, Ireland, Austria, New Zealand, China and Japan conveyed that they needed clearance from their capitals to approve this text. The first country to communicate its acceptance, the next morning, was Japan followed by China. Ireland, Austria and New Zealand and the final text was approved.

There are significant changes in Rev.3 when compared to Rev.1 such as tighter language on the kind of consultation mechanism that the NSG will follow. Paragraph 16 of the NSG guidelines prescribes a review mechanism in the event of violation of safeguards; however, it does not make it mandatory for the NSG to meet. The NSG waiver has made the meeting of the NSG mandatory even while the decision would still be on the basis of consensus. Ireland, Austria and New Zealand also insisted on including automatic termination of supplies in the event of India violating on any of its commitments, but France and Russia resisted this. The opponents also failed in incorporating explicit restrictions on Enrichment and Reprocessing (ENR) technology. India, on its part, does not consider that the reference made to the EAM's statement in the chapeau of Paragraph 3 of the waiver as harmful or conditional.

The Role of US and China

To sum up, the deal was propelled by a grand strategic vision of building an alliance with India, a prerequisite of which is to accept India's nuclear-weapons status. At the same time, there was an impulse within the American establishment to pursue non-proliferation objectives. These twin objectives were pursued diligently at every step - on 18 July, in the separation plan, in the 123 negotiations and it was reflected twice in the NSG process (21-22 August meeting and the subsequent draft). The US always had a tough time in balancing its strategic and non-proliferation objectives. As a result, talks almost collapsed at each stage and required political intervention at the highest level to rescue the process, the final manifestation of which took place on the night of 5 September.

The Chinese strategy, on the other hand, was to never be on the forefront. During the meeting on 4-6 September when it became clear that the G-6 had established a certain momentum, China felt more confident to openly suggest amendments. For instance, one of the suggestions was to use such language that might open the door for Pakistan to avail a waiver in future. The reason was China resented the fact that the US, as a declining power, unilaterally changed the rules of the international game and as a rising power, Beijing felt the need to be consulted. The US, on the other hand, did not consult China enough because it was never at the forefront of opposition and, therefore, the US assumed that if the waiver has to go through, the G-6 and Japan had to be dealt with first. Furious for having been taken for granted, China dragged the consultations on the night of 5 September until the point it reached an impasse. There, however, is also an opinion that China's behaviour was based on more than simply a desire to teach the US a lesson not to neglect them. Nevertheless, China's strategy misfired because despite efforts to remain out of the limelight and not attract criticism, the entire media focus in India was on China.

Problem areas in the NSG waiver

In conclusion, India has emerged out of the NSG meeting, fully aware that the American diplomatic might which was responsible for pushing the waiver overnight can be deployed again for revoking the waiver should India's relations with the US sour. India should develop a web of interlocking interests with the 45 NSG members so that the cost to individual member of terminating cooperation with India is such that it would require extreme provocation.

Paragraph 2 states that India will abide by the NSG's guidelines but these guidelines are not static. Therefore, the question arises: How can India commit to abide by guidelines unless India is not a party to the NSG's decisions? Paragraph 4 of the waiver has a savings clause that states, "Participation of India in the decisions regarding proposed amendments will facilitate their effective implementation by India." Although this clause provides a leg to stand on should guidelines change, India's long-term objective should be to push for NSG membership. NSG has to seriously consider moving forward its relationship with India from cooperation to partnership to eventual membership.

Moving further, the IAEA Additional Protocol (AP) is not a problem. The model AP states very clearly three categories of states - those that accept full-scope safeguards are obligated to follow all the measures of AP, the nuclear-weapons states who's AP should embody measures which they want to accept, and the third category is referred to as other states, which is what India is. India's negotiating model with the IAEA on the AP will closely follow the AP of the five nuclear-weapons states.

Finally, it would prove foolhardy for India, a country that is planning to invest billions of dollars on expensive equipments, to enter into commercial agreements with the US without clarifying and contesting the interpretations stated in the 26-page Bush-Berman letter.

Discussion

NSG Waiver

The NSG waiver is not only about ending India's nuclear isolation but also technological isolation. Many Indian industries suffered because India was not able to import items mentioned in the trigger list. In essence, India suffered even before the NSG's 1992 decision to adopt full-scope safeguards as a condition for nuclear sales.

India knew from the beginning that getting the NSG waiver would be the toughest step because India is not a member of the NSG and, therefore, Indian officials could not be a part of the meetings. The US had to represent India and fight its battle.

China's Role

China's behaviour at the NSG was unfriendly. However, India should be careful not to over interpret China's behaviour. As a rising power, China's behaviour reflected insecurity and resentment when they were not consulted by the US. This, however, will not affect Sino-Indian relations.

Role of other countries

France and Russia were extremely supportive, especially when they held firm on not including automatic termination of supplies in the event of India violating any of its commitments. The United Kingdom, on its part, was quiet but supportive. Japan was successful in keeping its name off the headlines even as it extended massive support to the G-6 opposing counties.

Bush-Berman Letter

The government of India was aware that such a document (Berman letter) exists, but was unaware of the contents of the letter. India is right in considering the 123 Agreement as the document establishing clear rights and legally binding obligations as far as future fuel supplies are concerned. The leaked letter, however, shows that there is a huge gap between the Indian and American perception of the 123 Agreement. India should therefore contest and clear these differences before signing the 123 Agreement else it would be detrimental for India.