The U.S.-Indian Deal and Its Impact

Sharon Squassoni

The decision five years ago by the United States to open up nuclear trade with India overturned decades of U.S. and global nonproliferation policy. Initially, it evoked only muted criticism from the nonproliferation community. Many U.S. and foreign experts hoped that the deal would fall through or that it could be salvaged by pressing India for nonproliferation concessions. Those hopes faded as the details and process of the agreement unfolded. Critics feared that global nonproliferation norms would be undermined by the extension of nuclear trade to India, a state that has tested nuclear weapons and never signed the nuclear Nonproliferation Treaty (NPT). They also feared that the deal could have the practical result of freeing up domestic uranium that India could use for its weapons program.

The Bush administration justified its actions by declaring that India would be brought into the “mainstream” of nonproliferation. Five years later, however, India’s nonproliferation behavior has neither improved nor worsened. Rather than India moving into the mainstream, the mainstream has moved to it. As the “nonproliferation ayatollahs” feared,[1] other states have begun to look at India’s example and ask, “If India, why not us?” India’s brand of exceptionalism matters less to these states than the possibility of exceptionalism, and a few are prepared to make their own case.

Past as Prologue

Thirty years ago, the United States cut off nuclear trade with India after that country tested a nuclear explosive device in 1974. India produced the plutonium for its test using materials and equipment it had obtained from Canada and the United States under a peaceful-use commitment. The United States responded by forming the Nuclear Suppliers Group (NSG) to avoid similar such incidents, and the U.S. Congress responded by enacting the 1978 Nuclear Nonproliferation Act (NNPA). The presumption of the NNPA was that piecemeal safeguards were not enough to prevent proliferation; only full-scope safeguards and therefore membership in the NPT could ensure peaceful uses. The NSG’s nonbinding set of guidelines for nuclear exports did not require full-scope safeguards as a condition of supply until much later. The adoption of this requirement in 1992 was hailed as a significant achievement.

At the time the NNPA was passed, the United States had been supplying fuel to India for the U.S.-built Tarapur reactors. Thereafter, the United States quietly facilitated supply by other countries. France provided fuel until the 1992 NSG decision, and China supplied fuel from 1994 until 2004, when it joined the NSG. Russia subsequently offered to provide fuel, but encountered U.S. objections. The first collateral damage of the U.S.-Indian deal came when Russia inked an agreement with India for Tarapur resupply just days before President George W. Bush arrived in New Delhi in 2006.

Anatomy of a Deal

Efforts to create a strategic partnership with India date back to the Clinton presidency although India’s 1998 nuclear tests temporarily halted them. Advocates of closer relations with India argued that expanding the partnership between the two countries was natural because the United States and India had so many common interests. For both sides, however, the nuclear issue got in the way. India, which craved legitimization of its nuclear weapons (“strategic”) program, insisted the United States had to lift restrictions on U.S. nuclear trade. U.S. policy, at least until the Bush administration, was that India had to freeze and roll back its nuclear weapons program.

Indian and U.S. strategic thinkers devised a way to resolve the nuclear proliferation tensions between the two countries: abandon restrictions on U.S. and global nuclear trade while asking for minimal nonproliferation commitments from India. Under the two countries’ July 18, 2005, joint statement, India committed to continuing its nuclear test moratorium, supporting U.S. efforts on a treaty to ban the production of fissile material for nuclear weapons, separating its civilian from military programs, and placing a portion of its facilities, but no uranium-enrichment or spent fuel reprocessing facilities and no material, under International Atomic Energy Agency (IAEA) safeguards.

Congress Gets Involved

Because the NNPA was designed to preclude nuclear cooperation with states that were outside the NPT, India clearly did not meet all the requirements of the law and would thus have to be considered an exceptional case. The law allows for the president to make an exception to the nine requirements contained in Section 123 of the Atomic Energy Act, but only with a determination that meeting those requirements would be “seriously prejudicial to the achievement of U.S. non-proliferation objectives or otherwise jeopardize the common defense and security.” The Bush administration clearly did not want to take this path, which also would have required Congress to pass a law to approve the agreement. (An agreement that meets all the requirements of the law has the presumption of passage; it can enter into force after 90 days of so-called continuous session unless Congress passes a law against it.)

The Bush administration sought legislation that would have had Congress approve nuclear cooperation with India even before an agreement had been finalized. The House responded by passing the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act, which the Senate adopted in December 2006. The act created the needed exception for India, but it also sought to clarify several of India’s commitments. In particular, some members of Congress, including then-Senator Barack Obama (D-Ill.), were concerned that nuclear cooperation might continue if India tested nuclear weapons again, because of the inclusion of multiple assurances of fuel supply for India and because of New Delhi’s insistence on the right to take “corrective actions” in the event of fuel supply termination.[2] Under U.S. law, a nuclear test explosion by India could be grounds for breaking off nuclear cooperation.

Members of Congress were also concerned that the United States might seek to bypass the NSG and therefore made the U.S. agreement’s entry into force contingent on a decision by the NSG to permit supply. Unfortunately, this approach seemed to galvanize the Bush administration to push for rapid-fire completion of all the necessary steps: India’s safeguards agreement was hastily approved at a special IAEA meeting in August 2008, and the NSG exemption was handled just a few weeks later in two special sessions. According to some participants, the Bush administration exerted unprecedented political pressure at the NSG to clinch the deal, including phone calls from U.S. cabinet members to their foreign counterparts during negotiating sessions. With an NSG approval in hand, the Bush administration returned to Congress and, by October 1, got a winning vote. A key part of the administration’s argument was that it made no sense to hold back U.S. nuclear cooperation with India once the door to global cooperation had been unlocked,[3] and few members of Congress were inclined to disagree.

Fallout From the Deal

Creating an “exceptional” nonparty to the NPT has increased pressure across the nonproliferation regime. States have pushed the boundary between legally binding and voluntary commitments. NSG consensus has suffered dramatically, as China and Russia have exploited the political disarray for their own national benefit. Efforts to restrict enrichment and reprocessing may suffer, as some states insist on their “legal” rights. At the 2010 NPT Review Conference in May, the language in the action plan referring to states’ fuel cycle decisions called on treaty parties to “[r]espect each country’s choices and decisions in the field of peaceful uses of nuclear energy without jeopardizing its policies or international cooperation agreements and arrangements for peaceful uses of nuclear energy and its fuel cycle choices,” a swipe at efforts to get countries to forswear the acquisition of sensitive technology such as uranium enrichment and spent fuel reprocessing.

NSG Consensus

Russia lost no time in restarting nuclear cooperation with India. Days before Bush arrived in New Delhi in 2006 to finalize India’s plan to place some of its facilities under safeguards, Russian officials informed the NSG that they would resupply fuel to India’s Tarapur reactors. At the time, the NSG had not yet considered an exception for India, so the Russian action violated the guidelines. Although it was clear that the Bush administration also would seek an NSG exemption for India, Russia’s action revealed the willingness of some suppliers to exploit potential gaps in the system.

In this context, China’s recent plan to build two more power reactors for Pakistan is not surprising.[4] China has always been a supplier of peaceful and not-so-peaceful nuclear technology to Pakistan. In joining the NSG in 2004, China announced its intention to continue some kinds of cooperation with Pakistan under the NSG’s grandfathering provision. This included lifetime support and fuel supply for the Chashma I and II nuclear power plants, supply of heavy water and operational safety services to the Karachi nuclear power plant, and supply of fuel and operational safety services to the two safeguarded research reactors at PINSTECH.[5] At the time, Chashma I was operating, and Chashma II construction had not yet begun. If China builds these two newest reactors, it will be a blatant violation of NSG guidelines. In April 2006, Secretary of State Condoleezza Rice noted in answers to questions for the record from the Senate Foreign Relations Committee that “[i]f China did seek to provide additional reactors to Pakistan, it would need NSG accommodation. The NSG operates by consensus, so China would need the support of all other participating governments to proceed. We do not believe that the 45 member states of the Nuclear Suppliers Group would agree to such an accommodation, and we do not support such an initiative with Pakistan.”[6]

Israel, too, has sought to exploit the gaps. Israel, which is not a party to the NPT but is an adherent to NSG guidelines, has been openly discussing initiating a nuclear power program in its country. Israeli officials circulated a nonpaper to the NSG in March 2007 that suggested criteria that would allow both India and Israel to be exempted from full-scope safeguards requirements.[7]

At the same time, the NSG has been struggling with revisions to its guidelines on enrichment- and reprocessing-related exports. As a coda to the India deal, House Foreign Affairs Committee Chairman Howard Berman (D-Calif.) extracted a promise from Rice that the administration would move quickly to ensure an NSG decision on those revisions. In the draft language that the NSG has been considering, NPT membership is required for such transfers. India would thus be excluded from receiving such technology. Ironically, although Russia has since decided against such sensitive nuclear technology trade with India, France had already signed an agreement in September 2008 that would allow sensitive nuclear transfers.[8] In the interim, the Group of Eight’s 2004 policy of no new enrichment and reprocessing transfers was watered down in 2008 to allow for transfers if there is no replication of the technology.

Pakistan’s Reaction

From the start, Pakistan lodged objections to the U.S.-Indian deal, while asserting that it deserved the same deal. In March 2006, the Ministry of Foreign Affairs released a statement saying that “[t]he agreement represents an important relaxation of the NSG’s existing guidelines, and transfer of civilian nuclear technology from NSG members to non-NPT States. Pakistan has the same claim and expectation for international cooperation under safeguards for nuclear power generation, especially because Pakistan is a fossil fuel deficit country and has a significant and fully safeguarded nuclear power generation programme.” In the wake of the 2004 revelations about the Abdul Qadeer Khan black market nuclear network, however, the Bush administration was adamant about not pursuing a similar deal with Pakistan.

Pakistani officials have argued that the deal would free up India’s domestic uranium for weapons and that Pakistan would need to increase its own capability to produce fissile material. The National Command Authority declared in August 2007 that the agreement “would have implications on strategic stability as it would enable India to produce significant quantities of fissile material and nuclear weapons from un-safeguarded nuclear reactors.”[9]

Although Bush administration officials told Congress they would encourage India and Pakistan to exercise restraint in fissile material production, the deal seems to have accelerated Pakistan’s unsafeguarded uranium- and plutonium-production capability. Pakistan has been expanding its capabilities to produce plutonium in unsafeguarded production reactors (Khushab site) and reprocessing plants (PINSTECH site) and to process uranium (at the Dera Ghazi Khan site).[10] Finally, Pakistan’s perceptions of and concerns about the Indian civil nuclear deal also appear to have further degraded Islamabad’s willingness to engage in key nonproliferation and disarmament talks. Responding to a press question in 2009 about the prospects that Pakistan would follow suit if India joined the Comprehensive Test Ban Treaty (CTBT), the Ministry of Foreign Affairs spokesman noted that “[o]bviously new realities have to be considered. I can tell you that at this point in time there is no consideration to sign the CTBT.”[11] Pakistan has also hardened its opposition to the start of fissile material production cutoff talks at the Conference on Disarmament (CD) in Geneva. For more than a decade, Pakistan has complained that that a cutoff treaty must not lock in disparities in fissile material stocks.[12] The India deal has only underscored that fear.

Fuel Cycle, Cooperation Rights

Regardless of the outcome of NSG decisions on technology transfers, the India deal has affected countries’ expectations about their rights regarding fuel cycle decisions and nuclear cooperation. Although India is meant to be an exception, it is clearly seen as a pathbreaker of sorts. Until the India deal, the United States did not give programmatic consent, as opposed to case-by-case consent, for reprocessing U.S.-origin fuel unless a country already had an advanced nuclear program, including reprocessing and enrichment plants; did not pose a proliferation risk; was not located in regions of proliferation concern; and had excellent nonproliferation credentials. Until India, the United States had approved the reprocessing of U.S.-origin spent nuclear fuel only in Japan and EURATOM countries France and the United Kingdom. Additionally, the U.S.-Indian deal has left the door open to enrichment and reprocessing cooperation, subject to certain requirements (the facilities must be multilateral or part of a project to improve proliferation resistance) and approval of an amended agreement. Until now, the United States has only engaged in enrichment cooperation with one state (Australia), and in that case, the technology transfer was to the United States, not the other way around.

With the resurgence of interest in nuclear energy, many states are considering their options and the potential for cooperation with advanced nuclear states. South Korea, for example, is likely to request programmatic consent for reprocessing U.S.-origin spent fuel. Without an India deal, it might have asked for this anyway. With an India deal, it may be more successful. Now, South Korea also is interested in keeping its options open on uranium enrichment. One thing is certain: the India deal has shown states that the path to global acceptance of capabilities is through the United States.

2010 NPT Review Conference

During the 2010 NPT Review Conference, India’s special status was a significant irritant. The 118 members of the Nonaligned Movement (NAM) charged that the U.S.-Indian nuclear deal had given an NPT nonparty more benefits than NPT parties. This had two effects: NAM countries sought to restrict benefits to India by including language on the need for full-scope safeguards for nuclear supply, and they sought to widen their own possibilities for supply by including language on fuel cycle rights.

In the case of the first, the NAM argued that the review conference’s final document should reiterate a requirement for comprehensive safeguards for “existing or new” nuclear supply arrangements as well as a requirement to forswear the acquisition of nuclear weapons. U.S. officials could not accept language that would apply to India and argued against inclusion of the word “existing.”[13] The final president’s statement reaffirmed that “new supply arrangements” should require full-scope safeguards and “international legally-binding commitments not to acquire nuclear weapons.” The statement also calls on all parties to give “preferential treatment to the non-nuclear weapons States parties to the Treaty, taking the needs of developing countries, in particular, into account.”

In the case of the second effect, Action 47 of the final document, as noted earlier, urges all states to respect fuel cycle choices without jeopardizing international cooperation agreements.


The U.S.-Indian nuclear deal bestows privileges on India beyond what is normally given to states in good standing with their nonproliferation obligations. To lessen the negative impact of the deal, the global nonproliferation regime needs to return to more equitable approaches to restrictions on technology dissemination. From the supply side, the NSG needs to adopt meaningful restrictions on enrichment and reprocessing transfers that, at a minimum, do not allow any such cooperation with India and, more importantly, strongly limit the further dissemination of such capabilities. Cradle-to-grave fuel supply services could help provide incentives to countries not to acquire sensitive technologies, but they cannot prevent them. Above all, the regime needs to go beyond approaches that perpetuate dividing lines between the haves and the have-nots.

Instead, a single vision for a nuclear energy future that complements nonproliferation and disarmament objectives, rather than defeats them, is needed. Elements could include limitations on all states and legally binding commitments not to build national fissile material production capabilities. Approaches might include multinational fuel-cycle centers or an international nuclear fuel authority, as envisioned in the NNPA. Connecting fuel cycle restrictions to disarmament obligations, such as in a fissile material production cutoff treaty, could be helpful to win broader support.

These are ambitious goals, but small-scale revisions to the nonproliferation regime will not be able to repair the damage that the India deal has caused.

Sharon Squassoni is a senior fellow and director of the Proliferation Prevention Program at the Center for Strategic and International Studies. From 2002 to 2007, she was a senior specialist for weapons of mass destruction at the Congressional Research Service.


1. The term “nonproliferation ayatollah” was coined in the Indian press prior to the U.S.-Indian deal to describe U.S. and Western experts that were critical of India’s nuclear weapons program. It was used extensively during the debates from 2005 to 2008 to disparage nonproliferation experts opposed to the deal. See, for example, Kaushik Kapistalam, “The Reign of the Non-proliferation Ayatollahs,” Bharat Rakshak Monitor,Vol. 6, No. 5 (March-April 2004).

2. In a colloquy with Sen. Richard Lugar (R-Ind.) on November 16, 2006, Obama sought to clarify that, under the terms of the implementing legislation, “in the event of a future nuclear test by the Government of India, nuclear power reactor fuel and equipment sales, and nuclear technology cooperation would terminate.”

3. The closing line of a letter from Secretary of State Condoleezza Rice urging Senate Majority Leader Harry Reid (D-Nev.) to support the House legislation (H.R. 7081) on October 1, 2008, stated, “You can also help ensure that U.S. industry—just like its international counterparts—is able to engage with India in civil nuclear trade.”

4. See Daniel Horner, “China, Pakistan Set Reactor Deal,” Arms Control Today, June 2010.

5. “Answers to Questions for the Record Submitted to Secretary of State Condoleezza Rice by Senator Richard Lugar,” in Senate Committee on Foreign Relations, United States-India Peaceful Atomic Energy Cooperation and U.S. Additional Protocol Implementation Act, S. Rpt. 109-288, p. 164.

6. Ibid.

7. David Siegel, a spokesman for the Israeli embassy in Washington, told The Washington Post in 2007 that “Israel, recognized to be a full-fledged adherent to the NSG guidelines, has urged the NSG to consider adopting a generic, multi-tiered, criteria-based approach towards nuclear technology transfers.” See Glenn Kessler, “Israel Submits Nuclear Trade Plan,” The Washington Post, September 30, 2007.

8. For text of the Indo-French deal, see

9. See “Statement by the National Command Authority,” August 2, 2007,

10. See Paul Brannan, “Steam Emitted From Second Khushab Reactor Cooling Towers; Pakistan May Be Operating Second Reactor,” ISIS Reports, March 24, 2010; David Albright, Paul Brannan, and Robert Kelley, “Pakistan Expanding Dera Ghazi Khan Nuclear Site: Time for U.S. to Call for Limits,” ISIS Reports, May 19, 2009.

11. See

12. See “FMCT Resisted by Brazil, Japan, New Zealand, Pakistan, Group of 21,” Dawn, April 19, 2010.

13. Peter Crail, “NPT Parties Agree on Middle East Meeting,” Arms Control Today, June 2010.