Looking for Fallout from the U.S.-India Nuclear Deal

Stephen P. Cohen and
Stephen P. Cohen
Stephen P. Cohen Former Brookings Expert
Dhruva Jaishankar
Dhruva Jaishankar Former Brookings Expert, Director, US Initiative - Observer Research Foundation, Non-Resident Fellow - Lowy Institute

August 1, 2008

Two weeks ago, the Indian government of Prime Minister Manmohan Singh narrowly won a confidence vote in parliament. The political crisis had been precipitated by the government’s decision to pursue a civilian nuclear agreement with the United States, initially announced in 2005. The deal calls for India to separate its military and civilian nuclear programs, with the latter becoming subject to international regulations and eligible for assistance from the international community, led by the United States.

The nuclear agreement has direct implications for India, for the U.S.-India relationship and for the global nuclear order. It would enable India to diversify its energy profile and reduce its carbon emissions. It gives India access to civil nuclear and other high technologies, while opening these sectors of the Indian market to American and western companies. Proponents argue that that the benefits incurred by all the relevant players – India, the United States and the broader international community – far outweigh the potential costs. India gains energy and technology; the United States expands market access for its corporations and gains Indian goodwill; the international community could benefit from lower carbon emissions and by bringing Indian civilian reactors under safeguards.

As the agreement enters its final stretch, needing a unanimous exemption from the 45 member states of the Nuclear Suppliers Group (NSG) and the U.S. Congress’s approval of a bilateral agreement negotiated last year, at least three issues merit closer examination. Beyond the immediate implications of the agreement, the answers to these questions will over time indicate whether the efforts exerted in implementing the nuclear agreement have been for naught, or whether they have contributed to one of President Bush’s most significant foreign policy successes.

First, will the agreement translate into sales for U.S. corporations? The U.S. government hopes that the momentum generated by the deal can lead to large civilian nuclear and defense purchases by India from U.S. corporations. However, American companies are likely to receive stiff competition from European and Russian vendors. While India has made some defense purchases from the United States in recent years, several major agreements have been left hanging in the balance. In addition, many analysts believe that India will turn to Russia and France – who have fewer restrictions than the United States – to supply nuclear fuel and equipment.

Second, how will the agreement impact that U.S.-India strategic relationship? While a nuclear exception for India will generate much goodwill for the United States in that country, the closeness of the bilateral partnership in the coming years and decades is also likely to be tested. The United States and India certainly have common interests in combating terrorism, securing trade routes in the Indian Ocean, and hedging against a rising China, but the two countries also diverge significantly on Pakistan, Iran and Burma.

Finally, what will be the non-proliferation implications of the nuclear agreement? Critics argue that the agreement rewards India for developing nuclear weapons, that it enables India to channel its domestic uranium to its weapons program, which could trigger a regional arms race, and that it sets a dangerous precedent, allowing nuclear powers to strike similar agreements with other states.

The nonproliferation aspects of the agreement should be examined, but they are also frequently overstated. India experienced over three decades of nuclear and technological isolation for its weapons program, hardly a reward for bad behavior. India was also never a signatory to the nuclear Non-Proliferation Treaty (NPT) and refrained from proliferating its nuclear know-how during its period of seclusion from the nuclear mainstream.

The deal itself is also unlikely to trigger an arms race with Pakistan or China, as some analyses have suggested. Since overtly declaring its nuclear status in 1998, India has, by all calculations, not rushed to manufacture large numbers of atomic weapons. Based on estimates of its fissile material production, and its defense technology developments and acquisitions, it appears as if India has settled for a small but diversified nuclear arsenal.

Finally, the agreement is unlikely to trigger a breakdown in the global nuclear order. The White House and New Delhi have sought clearances from relevant bodies as part of pursuing the deal. In 2006, Congress enabled an exception for India in the eyes of U.S. law. On August 1, the International Atomic Energy Agency’s Board of Governors ratified a safeguards agreement for India’s civilian facilities. Now the NSG will have to unanimously approve an exception for India and the U.S. Congress’s final approval will be required. Should another major power (such as France, China or Russia) want to provide a similar exception for another country (such as Pakistan, Iran or Israel) it would have to complete similar procedures.