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January 28, 2004
Nonproliferation Experts Analyze State Department Responses to Congressional Questions Concerning U.S.-Indian Nuclear Deal
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Note for Reporters by Sharon Squassoni (202-939-2297), Fred McGoldrick (617-298-2024), and Daryl G. Kimball (202-463-8270 x107)*
September 4, 2008

(Washington, D.C.) As U.S. and Indian officials race against the clock to win domestic and international approval for a controversial proposal to relax rules governing nuclear trade with India, the House Committee on Foreign Affairs (HCFA) has made public the Department of State’s January 2008 responses to more than 40 questions sent by the committee in October 2007 that were aimed at sorting out ambiguous and contradictory statements about the August 2007 U.S.-Indian nuclear cooperation agreement.

Background

Under a 2006 law known as the Hyde Act, Congress granted the U.S. president limited and conditional authority to waive the longstanding U.S. legal restrictions on nuclear trade with countries, such as India, that have tested nuclear weapons, have not joined the nuclear Nonproliferation Treaty (NPT), and do not allow comprehensive international nuclear safeguards.

In 2007, Washington and New Delhi negotiated a bilateral nuclear trade agreement, known as a 123 agreement, which President George W. Bush may only submit to Congress for its possible approval if the 45-member Nuclear Suppliers Group (NSG) agrees by consensus to an India-specific exemption from group guidelines, which currently restrict nuclear trade with India. The NSG is meeting Sept. 4 and 5 in Vienna to consider a revised U.S. proposal to exempt India.

Given India’s demands for a “clean” and “unconditional” exemption and proposed amendments from approximately 15 NSG countries for conditions and restriction on trade with India (barring enrichment or reprocessing technology transfers and terminating trade if India resumes nuclear testing), it is highly unlikely the NSG will reach a decision anytime soon.

Congressional Questions and the State Department’s Responses

The HCFA in October 2007 submitted 45 questions to the State Department and its responses were delivered in February 2008. But they were put under a virtual “gag order” by the Bush administration until now.

The good news is that the Bush administration interpretation of the U.S.-Indian 123 agreement reflects the right of the United States and requirement (per Sections 123 a (4) and 129 of Atomic Energy Act) to cut off nuclear trade if India tests. However, it is doubtful that the Indian government agrees.

Consequently it is essential that the NSG write this “post-condition” into any decision it might make to grant an exemption for India if the United States expects other nations to follow suit.

The following is a preliminary analysis of the responses to questions on several key issues:

“Full” nuclear cooperation: Indian officials insist this means enrichment and reprocessing cooperation. In response to the HCFA questions, the State Department wrote:

1. “As a matter of policy, the United States does not transfer dual-use items for use in sensitive nuclear facilities.” (Q. 4)

2. “Consistent with standing U.S. policy, the USG will not assist India in the design, construction, or operation of SNT [sensitive nuclear technologies] through the transfer of dual-use items.” (Q. 5)

3. “The Administration does not plan to negotiate an amendment to the proposed U.S.-Indian Agreement to transfer to India sensitive nuclear facilities or critical components of such facilities.” (Q. 6)

Bottom line: The United States does not plan to transfer enrichment and reprocessing technology, which could be used to assist India's weapons program. If the NSG decides to grant India an exemption from its guidelines, it should establish an unambiguous policy barring the transfer of enrichment, reprocessing, or heavy water production technology to India.

Termination for nuclear testing: Indian officials have stressed that the 123 agreement does not constrain India’s ability to test a nuclear device. However, the State Department told the HCFA:

1. “Article 14 of the…agreement…provides for a clear right for the United States to terminate nuclear cooperation and a right to require the return of equipment and materials subject to the agreement in all of the circumstances required under the AEA, including if India detonated a nuclear explosive device.” (Q. 35)

2. “…both of the actions that must be taken to exercise the right of return [giving written notice of termination and ceasing cooperation] would be within the discretion of the USG, and both actions could be taken at once.” (Q. 36)

3. “…Should India detonate a nuclear explosive device, the United States has the right to cease all nuclear cooperation with India immediately, including the supply of fuel, as well as to request the return of any items transferred from the United States, including fresh fuel.” (Q. 16)

Bottom line: These answers tie an Indian nuclear test definitively to termination of nuclear cooperation—something that Indian officials have suggested is not the case. The U.S.-Indian draft cooperation agreement doesn’t mention testing at all as a reason for termination and tries to soften the impact of a potential nuclear test on the agreement by referring to whether a trigger for termination resulted from a changed security environment or the actions of another state (for example, Pakistan). Indian officials also have interpreted the agreement as having a “cooling off” period of a year before termination would actually happen. The State Department answers suggest that action after a nuclear test would be swift, unambiguous, and unilateral. So too should the actions of other NSG members. If the NSG grants India an exemption, it should specify that NSG nuclear trade shall be terminated and unused fuel supplies returned if India conducts another nuclear test explosion for any reason.

Fuel supply assurances: Article 5 of the 123 agreement, as well as the Indian-specific safeguards agreement approved Aug. 1, refer to a range of fuel supply assurances. Indian officials have insisted on their ability to take corrective measures in the event that fuel supplies are disrupted. This implies that their legal obligation to keep indigenous reactors is tied to assured supply. Yet U.S. responses indicate that the fuel assurances are not legally binding and they are not meant to insulate India against the consequences of a nuclear test:

1. “The fuel supply assurances…from the March 2006 separation plan…are important Presidential commitments that the United States intends to uphold, consistent with U.S. law.” (Q. 14)

2. “Like all other U.S. agreements for nuclear cooperation, the proposed U.S.-Indian agreement is a framework agreement and does not compel any specific cooperation.” (Q. 37)

3. “The use of the phrase ‘disruption of fuel supplies’…is meant to refer to disruptions in supply to India that may result through no fault of its own.” Examples include a trade war resulting in the cutoff of supply, market disruptions in the global supply of fuel, and the potential failure of an American company to fulfill fuel supply contracts. We believe the Indian government shares our understanding of this provision. (Q. 15)

4. “The fuel supply assurances are not, however, meant to insulate India against the consequences of a nuclear explosive test.” (Q. 18)

Bottom line: Even though the Indian government has argued that it has negotiated long-term fuel supply assurances in its bilateral nuclear cooperation agreement, it is clear that U.S. commitments in this regard are political and not legally-binding in nature and would not apply if India resumed nuclear testing. NSG states should not undermine this policy by allowing India to accumulate strategic or lifetime reserves of fuel that would enable India to overcome a supply cutoff in the event it resumes testing.

Strategic reserve: India has insisted on a lifetime reserve of fuel for its reactors. However, the State Department’s responses to the HCFA paint a different picture:

1. “The parameters of the proposed ‘strategic reserve’ and India’s capacity to acquire nuclear fuel for its reactors will be developed over time.” (Q. 19)

2. “The U.S.-Indian Agreement does not define ‘reasonable operating requirements’ and the two governments have not discussed a definition….We would expect that the actual amount of fuel put in the reserve would depend…on such factors as the availability of fuel in the market, price, Indian storage capacity, costs of storage, and similar practical considerations.” (Q. 20)

Bottom line: The United States has not made a specific commitment to help India amass a strategic fuel reserve. Nevertheless, it is important that the NSG clarifies that such a reserve shall not be created, individually or collectively, and that any fuel supplies provided are “commensurate with reasonable reactor operating requirements,” as specified in the Hyde Act.

Corrective measures: This has never been defined by either side or the International Atomic Energy Agency (IAEA). In response to the HCFA questions, the State Department wrote:

“Until a safeguards agreement is completed between India and the IAEA and the issue of ‘corrective measures’ is clarified, we cannot comment on the appropriateness of the agreement.” (Q. 25)

Bottom line: This response, along with the Indian government’s failure to acknowledge that it may not unilaterally withdraw facilities or material from safeguards, would suggest the Bush administration is still not in a position to determine whether the IAEA-Indian safeguards agreement is consistent with the Hyde Act requirement that the safeguards are permanent and consistent with IAEA standards and practices.

Consent to reprocessing: In its October 2007 questions, the HCFA asked whether safeguards on a reprocessing plant would differ for a non-NPT state. The State Department told the HCFA that:

“…there would be little, if any, difference in the technical challenge of applying safeguards to such a facility [a new reprocessing plant in India] as opposed to a comparable facility in a state with a comprehensive safeguards agreement….In the case of India, the Agency’s safeguards conclusions would have to be limited to the civil facilities and materials under safeguards, and could not be extrapolated to apply to the nuclear program as a whole” (Q. 27)

Yet, U.S. officials commented to earlier congressional questions contained in S. Report 109-288 on the problem of personnel rotations between safeguarded and unsafeguarded Indian nuclear facilities. See below and page 160 of Senate Report 109-288, dated July 2006.

Question (2). The Separation Plan tabled by the Indian Government with its Parliament states nothing about the future bureaucratic structure of its Department of Atomic Energy (DAE) in respect of removing from that organization any personnel involved in any military activities. To what extent will DAE personnel working at any declared sites, facilities and locations continue to have access to military programs in India?

The State Department responded: “In the July 18, 2005 Joint Statement and under India’s March 2, 2006 separation plan, the Government of India committed to separate its civil and military facilities and programs. While the specific issue of DAE personnel has not yet been discussed in detail, we would consider routine, frequent rotation of personnel between civil and military programs as being inconsistent with Indian commitments on separation. In our view, such a rotation would be inconsistent with India’s commitment to identify and separate its civil and military nuclear facilities and programs. We have made this position clear to the Indian government.”

Bottom line: NSG participant countries should agree not to grant India consent to reprocess nuclear fuel supplied by an NSG member in a facility that is not under permanent and unconditional IAEA safeguards.

Furthermore, it is important for NSG states to obtain further details regarding India’s proposed “separation plan” and to understand how the still-to-be-negotiated Additional Protocol between India and the IAEA regarding safeguards can improve confidence that civilian technology transfers do not leak into India’s military nuclear sector.

Click here for the full set of questions and responses.

* Daryl G. Kimball is the Executive Director of the Arms Control Association, Sharon Squassoni is a Senior Associate of the Nonproliferation Program at the Carnegie Endowment for International Peace, and Fred McGoldrick is an independent consultant who previously served as a former Director of Nonproliferation and Export Policy at the Department of State.

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