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Price of the Nuclear Deal

The Indo-US nuclear agreement is part and parcel of a larger evolving strategic relationship with the US that has political, economic, military and technological dimensions. This strategic "almost-an-alliance" is not some threat in the future, but a current reality that is sought to be deepened by the nuclear agreement. Even if one were to grant some degree of primacy to ending the isolation of the Indian nuclear industry, the price of the deal, in terms of strategic compromises across the board over a broad spectrum of other sectors, is far too high for India to pay.

Price of the Nuclear Deal

The Indo-US nuclear agreement is part and parcel of a largerevolving strategic relationship with the US that has political, economic, military and technological dimensions. This strategic“almost-an-alliance” is not some threat in the future, but a current reality that is sought to be deepened by the nuclearagreement. Even if one were to grant some degree of primacy to ending the isolation of the Indian nuclear industry, the price of thedeal, in terms of strategic compromises across the board over a broad spectrum of other sectors, is far too high for India to pay.


he article ‘The New Deal’ in Frontline by Siddharth Varadarajan (March 24, 2006) is perhaps one of the more sophisticated arguments justifying the Indo-US nuclear deal, to originate from the left of the political spectrum. It is also an argument directed principally at the Left, which seeks to argue that despite the Left’s genuine detestation of the Bush presidency and the objective risks in dealing with it, the deal is worth supporting.

The article begins with a provocative, up-front listing of four key reasons why the Bush administration would want such a deal, from its perception of US selfinterest. But having discussed these reasons, the key formulation is the following:

The fact that none of these four reasons sounds particularly appetising – indeed allsuggest that the offer of civil nuclearcooperation comes with a collateral pricetag in some other area – is by itself notsufficient grounds to reject or oppose sucha historic deal which offers the Indian nuclear industry a chance to end more than30 years of isolation. But they do suggestthe policy areas where utmost caution isrequired. If the unreasonable expectationsof the US – on the strategic front, theenergy security front, and the trade front

– are met fully or even partially, many ofthe gains stemming from the resumptionof civil nuclear cooperation will be lost.

Varadarajan immediately acknowledges that the Manmohan Singh government has endorsed the US approach on the Iran question. But in his reading, this ensued, in the final analysis, essentially because of the government’s “fear of losing the nuclear deal”. The writer’s real concern is with the future: “the danger is that India’s action on the Iran question at the International Atomic Energy Agency (IAEA) might get converted into a general pattern of behaviour as the US pushes its other pet projects”. His parting homily: “Even as it looks forward to the implementation of its nuclear deal with the US, then, New Delhi must be mindful of the collateral damage its relationship with Washington could cause for itself and the region”.

Collateral Price Tags

In essence, therefore, Varadarajan presents two arguments. The first is that ending the isolation of India’s nuclear industry is of such import that even if the deal with Washington causes some degree of collateral damage for India itself and in the region it is worth it in order to carry through the accord.

The second is that while the US may have “unreasonable expectations” of New Delhi, it is entirely possible that the latter will refuse to oblige Washington on these additionalities. India does not necessarily have to pay the collateral price tag for the deal that the US expects, with quid pro quos on the strategic, energy security or trade fronts.

To deal with the first argument requires some going back in history to understand the origins of the special place that the nuclear issue has in India’s political discourse. We shall therefore turn to the second argument immediately, since that can be

Economic and Political Weekly April 15, 2006

sustained only with a prodigious loss of short-term memory.

Varadarajan elegantly describes why nuclear cooperation with India would be perceived in Washington to be in the strategic interest of the US. In doing so, however, he significantly omits the question of what concrete signals the US has received from New Delhi in return, so that at least some of the many players in US foreign policy would be persuaded that a nuclear reprieve for India was worthwhile. Fortunately, since the making of US foreign policy is tended to rather carefully in Washington, we have the following useful list of such signals that was compiled by Ashley Tellis, a specialist in south Asian strategic affairs and nuclear policy. Tellis, who played a key background role in finalising the accord, presented them in his testimony to the US House of Representatives Committee on International Relations hearings on the “US-Indian global partnership” in November 2005. The list is worth quoting in its entirety:

Since 2001, India:

  • Enthusiastically endorsed the president’snew strategic framework, despite decadesof objections to US nuclear policies, at atime when even formal American allies withheld their support;
  • Offered unqualified support for the USanti-terrorism campaign in Afghanistan toinclude the use of numerous Indian military bases, an offer that was never madeeven to the Soviet Union which functioned as New Delhi’s patron during the lastdecades of the cold war;
  • Expressed no opposition whatsoever tothe president’s decision to withdraw fromthe ABM Treaty, despite the widespreadinternational and domestic condemnation of the US action;
  • Endorsed the US position on environmental protection and global climate changein the face of strident global opposition;
  • Assisted the US initiative to remove Jose Mauricio Bustani, Director-General of the Organisation for the Prohibition ofChemical Weapons despite strong thirdworld opposition in the United Nations;
  • Protected high-value US cargoes transiting the Straits of Malac during the criticalearly phase of the global war on terror,despite the absence of New Delhi’s traditional requirement of a covering UNmandate;
  • Eschewed leading or joining the international chorus of opposition to the US-led coalition campaign against Iraq, despite repeated entreaties from other major powers and third world states to that effect;
  • Considered seriously – and came closeto providing – an Indian army division for post-war stabilisation operations in Iraq, despite widespread national opposition to the US-led war;
  • Signed a 10-year defence cooperationframework agreement with the US thatidentifies common strategic goals and themeans for achieving them, despite strongdomestic opposition to, and regional suspicion about, such forms of collaborationwith Washington; and
  • Voted with the US at the September 2005IAEA Board of Governors meeting todeclare Iran in “non-compliance” with theNon-Proliferation Treaty, despite strongdomestic opposition and internationalsurprise.
  • Significantly, Ashley Tellis, commences this list in his testimony with the remark: “In fact, during the last five years, India has built up an impressive record of backing the US in a wide variety of issue-areas, despite its formal and continuing commitment to ‘non-alignment’ as a foreign policy doctrine. The list of Indian initiatives in support of the US is a lengthy one – many specific activities are in fact still classified – but the following iteration is offered by way of highlighting the reality and the possibilities of US-Indian strategic collaboration.”

    Ashley Tellis also makes the point that these instances of support to highly unpopular or controversial US positions occurred when in fact India was not in any formal sense an ally of the US. And in this period successive Indian governments continued to lay much rhetorical emphasis on the independence of their decisionmaking. In short, these instances of Indian support to US positions came without any significant pressure being exerted on India by Washington.

    Pattern of Behaviour

    The implications of this list, which is an enumeration of concrete instances and not the product of some kind of strategic theorising, run counter to Varadarajan’s argument. First, there is no reason to think that the Indian stand on the Iran issue is a one-shot affair, motivated by the desire to close the nuclear deal. On the contrary, India’s behaviour at the IAEA is the latest instance of a general pattern of behaviour, established over at least the last five years.

    Second, the list is a recording of initiatives that began in the period of the NDA government under prime minister Atal Bihari Vajpayee and continues seamlessly through into the period of the UPA dispensation under prime minister Manmohan Singh. Establishing this continuity of pro-US behaviour in Indian policy is clearly essential for Ashley Tellis in making a convincing case for nuclear cooperation with India. Third, the testimony notes, as we mentioned earlier, that this impressive record of backing the US on issues where the rest of world was opposed to the Bush administration is despite a formal commitment to non-alignment and the absence of any agreement that makes India a formal ally of the US.

    There are undoubtedly several other instances, over the last few years, that one can add to this list, where Indian governments have shifted policy positions to reduce divergence with US policy. Among these, particular mention should be made of India’s general opening up to Israel, together with a significant muting of India’s voice on the Palestine issue. India has also joined the nuclear weapons club in their hypocritical stand of ignoring the threat of Israel’s nuclear weapons, the source of the biggest nuclear threat in west Asia. This new policy has certainly resonated well with Washington.

    It is also worth emphasising that the Bush administration has not rushed in to open up to India in some penitential sense of urgency or sudden realisation of India’s importance in what it calls the forthcoming “Asian century”. It has tested the waters with the much lower-key agreements , the Strategic Partnership of 2001 and the Next Steps in Strategic Partnership of 2004, that were signed with India. The Bush administration’s confidence in its opening up to India and its determination to face down the US non-proliferation lobby that has opposed the deal, is certainly founded, at least in part, on this impressive record of pro-US behaviour built up over the last few years of strategic partnership.

    The record, that Ashley Tellis lays out, highlights the striking asymmetry in the development of the Indo-US relationship. For all the various gestures that India has made and the broad spectrum support it has offered to the US, the first substantial concession from the US side has been the nuclear deal, commencing with the joint statement of July 2005. The lifting of some of the post-Pokhran-II sanctions was certainly driven mainly by the US’ own strategic needs in south Asia in the aftermath of 9/11, particularly in relation to Pakistan. The NSSP was a positive signal, but within that framework, the US continued to make further demands on India to support strategic US initiatives, particularly on the non-proliferation front. It delivered some relief on sanctions-related matters but also left out much of significance.

    India and a Strategic Alliance

    An increasing strategic convergence between India and the US, drawing India ever closer into the strategic orbit of the US and eroding India’s strategic autonomy

    Economic and Political Weekly April 15, 2006 and independent foreign policy, appears, from the record, to be central to the nuclear deal rather than an additionality. The relationship that India has sought over the last few years and built up is virtually a strategic alliance, going well beyond the parameters of a prudent but necessary and unavoidable engagement with the world’s sole superpower. The US has been repeatedly assured by two successive Indian governments of this desire, assurances that have been delivered in terms of concrete instances of support to the US. In exchange for the prospect of eventually exiting the regime of nuclear isolation, while preserving as much recognition as possible of India’s status as a nuclear weapons state, both the NDA and UPA governments have been more than willing to surrender or narrow down their strategic and foreign policy options across the board, aligning with the US on everything from missile defence to climate change.

    The other major quid pro quo that the US expects from India is on the economic and trade front. On the question of the Iran gas pipeline, while the government of India continues to claim that it is still examining its viability, its furtherance of the US line on Iran is hardly conducive to smooth conduct of trade with the latter. With the possibility of economic sanctions against Iran looming large, a possibility that is a direct consequence of the US-led pressure on Iran in which India has acquiesced, it seems likely that the government of India is merely going through the motions of continuing to talk to Iran on the pipeline issue.

    Media comment in India has also generally attributed some role to US pressure in the removal of Mani Shankar Aiyer from the petroleum ministry. Overall, against the background of the developments in the hydrocarbon sector over the last two years, we may anticipate the continued susceptibility of Indian hydrocarbon policy to US pressure.

    US-India CEO Forum

    But in much of the pro-deal commentary in the US in both the media and analysts’ circles, one of the major pay-offs that has been anticipated is the opening up of the Indian economy to US business interests, across the board and not just in the hydrocarbon or nuclear power sector. The US-India CEO Forum report titled ‘US-India Strategic Economic Partnership’ is perhaps the clearest and most concrete expression of what US business interests expect. Remarkably, the head of the Planning Commission, Montek Singh Ahluwalia, announced that a separate committee would be set up to consider every one of the recommendations that have been made in the report and some action would be forthcoming in the time frame of three to four months. The alacrity of this response, not accorded to even the main points of the Common Minimum Programme after the UPA government took office, is certainly striking. In the report itself, a detailed examination of the various points for action by both governments, again reveals a notable asymmetry. There are considerably more policy demands on the government of India, across the entire range of industrial and service sectors. In some cases, the report even calls for the non-acceptance of certain recommendations that have been made by a specific committee appointed by the Planning Commission.

    One may be inclined not to attach too much significance to this CEO forum report, regarding it as no more than the usual wish list that is presented by external business interests when the economic reform and liberalisation issues are taken up in bilateral negotiations. However, in this

    Economic and Political Weekly April 15, 2006

    instance, the special status of this report, that has been co-drafted by some of the leading figures of Indian industry and finance, is clear. That the Planning Commission has agreed to take urgent action on the issues raised in the report, indicates that the agenda of big business has been placed on the official fast track.

    We are of course by now, in India, grown accustomed to the critical comments of multilateral lending institutions and other financial institutions on domestic economic, trade or industrial policy. However it is certainly not routine for a joint committee of Indian and foreign business leaders to target particular policy recommendations and explicitly demand their rollback. When the demand happens to be, as in this case, the rolling back of the recommendation that all the items in the “essential drug list” be subject to price controls, a blatantly anti-people, anti-poor demand if ever there was one, it does appear that the price that has been settled for the nuclear deal is getting to be unconscionably high.

    Broadening the scope of a strategic alliance with the US to focus on other areas also such as the economy, trade, science and technology, agriculture and so on is the distinctive new contribution of the UPA government, an approach that is more sophisticated than the crass obsession with strategic issues in the narrower sense that was the hallmark of the NDA style. Just as there is a section of strategic analysts who see substantial convergence of Indian and US strategic interests despite all the objective evidence to the contrary, there are also economists, financial experts and industrial policy specialists, who see substantial convergence of Indian and US interests in this broader sense on economic policy and related issues. Such elements clearly carry tremendous weight in the UPA government.

    As the general lack of public criticism of the CEO Joint Forum report demonstrates, the veneer of sophistication that is part of the discourse of these elements screens their ideologically driven “market fundamentalist” approach from closer scrutiny. The new danger with the UPA government is that, apart from its compromises on the strategic front, it is also preparing to surrender India’s strategic options in the larger economic sense, particularly in the sense of the economic well-being of the majority of the population. From the sense of urgency with which a number of initiatives of this kind were being pushed before and during the Bush visit, whose central theme was the nuclear agreement, it appears that this danger is considerably more than an additionality.

    In sum the evidence suggests that the nuclear agreement is part and parcel of a larger evolving strategic relationship with the US. This strategic almost-an-alliance is not some threat in the future, but a currrent reality that is sought to be deepened by the nuclear agreement. This strategic partnership is across the board and has political, economic, military and technological dimensions to it. While Indo-US deal undoubtedly confers some benefits in the narrow sense in the nuclear field, both the NDA and the UPA governments have already begun paying an extraordinary price for the deal. Even if one were to grant some degree of primacy to ending the isolation of the Indian nuclear industry, it is difficult to imagine that any kind of cost-benefit analysis would justify the price that is currently listed.

    Though we have not dealt with Varadarajan’s first argument directly, that ending the isolation of India’s nuclear industry is of such import that managing the collateral effects of the deal is worthwhile, we have already made the point that the price of the nuclear deal, in terms of strategic compromises across the board over a broad spectrum of other sectors, is far too high for India to pay. There however remains a point to be made, regarding the status of the nuclear issue in India’s current political discourse and whether it retains the same political significance as it did in the era before weaponisation and strategic alliances with the US. That, however, needs to be addressed in a separate article.



    Economic and Political Weekly April 15, 2006

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