A Raw Deal for India

On June 19, 2005, a Washington report in USA Today said: "More than 26 years after a near-meltdown at the Three Mile Island nuclear power plant, the Senate is considering an energy bill that includes financial incentives for construction of nuclear plants. It's the latest sign of the industry's quiet rehabilitation."

On July 18, 2005, less than a month later, US President George W. Bush received India's Prime Minister Manmohan Singh in Washington and the two leaders struck the now infamous US-India nuclear deal. Not many saw the deal leading to a major political crisis in New Delhi, which it is overcoming by sheer manipulation. But the connection between the deal and the US nuclear industry's "quiet rehabilitation" could not have been lost on close observers.

They must have noted, as the report did, that "the Nuclear Energy Institute's political action committee had contributed $76,376 to (Congressional) candidates so far" that year; with 95 percent of the contributions going to Republicans. The industry had also donated, according to the report, to Senate Democrats, including Tom Carper of Delaware, Ben Nelson of Nebraska and Mary Landrieu of Louisiana. The Energy Policy Act of 2005 included an array of incentives, amounting to billions of dollars, designed to promote nuclear power.

Economic and energy experts were extremely supportive. They argued that capturing a significant share of the market abroad, especially in large countries like India and China, would help the US nuclear suppliers lead what they called a "domestic renaissance in nuclear power." The emerging situation offered an equally mouth-watering opportunity for Western allies of the US as well as Russia.

With the nuclear power phase-out programs of the last decade in Western Europe (undertaken by Germany in 2000 and the Netherlands in 1994, notably), the region now awaits its first nuclear reactor in 17 years, to go online in 2011 in Finland, while the US has not acquired one in 35 years. The gigantic nuclear ambitions of the Asian giants have thrown much more than a mere lifeline to the previously languishing industry.

Chinese Vice President Zeng Qinghong had told his visiting US counterpart Dick Cheney as far back as April 2004 that China would build 24 to 30 nuclear power plants by 2020, at a cost of $1.5 billion each. By January 2006, the world was being told that about 70 new reactors were planned for completion within the next 10 years. And as many as 130 in 15 years, mainly in China and India.

As a result of the deal, it was given out, India hoped to generate 40,000 megawatts of nuclear power in 10 years, compared with current production of 3,900 megawatts. Subsequently, it was claimed that India planned to expand its current installed nuclear-energy capacity to 60,000 megawatts by 2040. The expansion was valued at no less than $150 billion.

Expert projections made in December 2006 envisaged an increase in India's nuclear arsenal by 40 to 50 weapons a year as a result of the deal. The country was also expected to acquire 40 nuclear reactors over the next two decades or so.

Some of the deal's American critics have argued that it would promote only the sale of US arms, and not reactors, to India, by "pardoning" this country for its offense of not signing the Nuclear Non-Proliferation Treaty (NPT). The US exporters have indeed been happily discussing sale of Boeing fighter planes, F-16 or F/A-18 fighter jets, as well as maritime surveillance planes, advanced radar, helicopters, missile defense and other equipment, while it is strikingly clear that the deal will promote India's strategic nuclear program in several ways. Indian defenders of the deal, however, claim that it is aimed mainly, if not solely, at civil nuclear energy cooperation.

Even if the deal is viewed in its demilitarized version, however, it is clearly one that meets the Western corporate interests and not those of energy-starved India.

The bilateral agreement signed in August 2007, arising from the deal but yet to be approved by the US Congress, allows nuclear trade between the two parties and "also, where appropriate, trade between third countries and either party of items obligated to the other party." The trade is envisaged in nuclear material or fuel, related technology and equipment. The trade in fuel, which is uranium, can only tie India and its energy program to an international cartel, notorious for its price manipulation practices. Representatives of the uranium producers of Canada, Australia, France, South Africa and the UK formed a secret cartel after confabulations in Paris in 1972. This led to the great uranium scam soon in the US, with Westinghouse House Electric becoming a victim of the cartel. The company, the largest US manufacturer of reactors, signed contracts to supply cheap uranium to utilities which bought its reactors and failed because of that cartel's price-fixing practices, standing to lose billions in the bargain. The cartel got away with the connivance of the governments of the five countries as well as the US.

The cartel's exposure did not change its conduct. The price of this precious metal, better known in the market in the powdered product called yellowcake, has always remained viciously volatile. Over the past five years, the international spot price of uranium has spiraled faster than that of crude oil, with its price now hovering six times above its long-term average of $10 a pound..

In January 2005, seven months before the deal was struck, a sharp rise in uranium prices was predicted. The uranium market, experts agreed, had become a classic "seller's market."

The prediction proved right. Between 2004 and 2007, the spot price of uranium more than quadrupled. According to an assessment made in June 2008, the nuclear construction program in India and China is likely to result in a 58 percent uranium price rebound. Such price fluctuations are not what exactly the doctor would order for a developing economy.

Of greater interest to the US would be the trade in nuclear technology. Even in 2004, the US had settled its dispute with China over the sale of nuclear reactors - despite the post-Tiananmen sanctions imposed in the name of democracy and articulations of concern over alleged Chinese proliferation of nuclear technology to Pakistan and Iran. The results, however, have fallen short of expectations in the US nuclear industry, which hopes for a better showing in the other major Asian market.

India, however, cannot be reassured by reports of the US stand at a meeting of nuclear suppliers in Vienna in June 2008 on the sale of sensitive technology. The US negotiators reportedly stayed firm in opposing transfers of any "replicable" technology. They are said to have favored the "black-box approach" that gives other nations the technologies without letting them know how they work.

As for trade in equipment, US exports to China in the past have included at least 25 items of "dual use," defined as technology which can be used for both peaceful and military aims, referring particularly to proliferation of nuclear weapons. These items included high-speed oscilloscopes, which can be used to "record the brief events at the heart of an atomic bomb before it flies apart," as one expert puts it. It remains to be seen if a closer look is taken at the issue in India's case.

Curiously, a "dual-use item" is defined in the bilateral US-India agreement as only "a nuclear-related item which has a technical use in both nuclear and non-nuclear applications"! The cause of "non-proliferation" may count for less than considerations of large profits for the nuclear industry and of its "quiet rehabilitation."

A freelance journalist and a peace activist in India, J. Sri Raman is the author of "Flashpoint" (Common Courage Press, USA). He is a regular contributor to Truthout.

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