Wednesday, September 03, 2008

The Letter Controversy: Allegations and Reality

The release of a State Department letter to the House Foreign Affairs Committee has supposedly embarrassed the Indian government causing it trouble no end or so goes the top headline in much of the media today. Yet, amazingly, I am yet to see anything all that new in this latest letter (BJP members have been referring to this Washington Post article). It spells out what has been said before by various US government officials. NDTV's grouse was this: 'While much of the letter is similar in substance to the arguments one has heard but the tone and tenor is what is riling the Indians'. Now, what is that supposed to mean? A punch packed in polite language is fine but to call a spade a spade is not? If style is supposed to matter more than substance, that speaks volumes of what the focus of our media has become - an emotional and impetuous bunch, more interested in rabblerousing than in any thoughtful or reasoned comment.

The only article where I found where the implications of this letter mentioned in some detail was in Rediff by Brahma Chellaney. Yet on closer examination none of his assertions stand up to scrutiny. Below are his points and my comments on each of them.

The US has given no binding fuel-supply assurance to India. The prime minister told the Lok Sabha on August 13, 2007 that 'detailed fuel supply assurances' by the US for 'the uninterrupted operation of our nuclear reactors' are 'reflected in full' in the 123 Agreement. But the Bush administration has denied this. Its letter to the House Committee states that the US will render help only in situations where 'disruptions in supply to India... result through no fault of its own,' such as a trade war or market disruptions. 'The fuel supply assurances are not, however, meant to insulate India against the consequences of a nuclear explosive test or a violation of nonproliferation commitments,' the letter said. The letter also reveals that the US has given no legally binding fuel-supply assurance of any kind.

The PM's words (you can find his speech here) ought to be understood to mean that the fuel supply assurances hold so long as the agreement remains which is what one expects to happen in the ordinary course. The letter says that a nuclear test will lead to termination of the agreement in which case, whatever is contained in it will also be voided. In other words, no agreement, no fuel supply. These words of the PM cannot be construed to have addressed a post-nuclear test scenario; the PM was only talking of a situation where the agreement remains but the fuel supplies are interrupted notwithstanding these provisions - that is exactly the kind of situation in which the US would help us restore the supply.

No US consent to India's stockpiling of lifetime fuel reserves for safeguarded power reactors. The prime minister had told the Lok Sabha on August 13, 2007 that, 'This Agreement envisages, in consonance with the Separation Plan, US support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply for the lifetime of India's reactors.' But the Bush administration's letter to the House Committee makes clear that India will not be allowed to build such stocks as to undercut US leverage to re-impose sanctions.

The US has not said that it will not allow India to build a strategic reserve - the exact words in the letter are 'The parameters of the proposed 'strategic reserve' and of India's capacity to acquire nuclear fuel for its reactors will be developed over time.' His claim that India will not be allowed to build such stocks as to undercut US leverage to re-impose sanctions is therefore premature.

US civil nuclear cooperation is explicitly conditioned to India not testing ever again. The prime minister told the Lok Sabha as recently as July 22, 2008 that, 'I confirm that there is nothing in these agreements which prevents us from further nuclear tests if warranted by our national security concerns. All that we are committed to is a voluntary moratorium on further testing.'

Last year, he had told Parliament that, 'There is nothing in the Agreement that would tie the hands of a future Government or legally constrain its options to protect India's security and defence needs.' The Bush administration, however, has told the House Committee that India has been left in no doubt that all cooperation will cease immediately if New Delhi [Images] conducted a test.

There is nothing in this letter that contradicts the PM's position. India has not committed anywhere in the 123 agreement to a moratorium on future testing. He mistakes the right to conduct a test with the cost of doing so. For example, we all have the right to smoke but that does not mean all of us will simply because we are also aware that availing of it also brings with it costs that we may not be willing to pay. Likewise, we are free to test provided we are willing to live with the loss of this agreement and all the advantages it brings with it along with a host of other losses that will follow from international sanctions. With increasing international trade and greater integration into the global system, the cost of defying the US-led international order is undoubtedly going to rise. In that sense, he is absolutely right - testing in 2009 or beyond will be a much more expensive decision for India than what it was in 1998.
The US has retained the right to suspend or terminate supplies at its own discretion. The Bush administration letter plainly contradicts the prime minister's assertion in Parliament on August 13, 2007 that, 'An elaborate multi-layered consultation process has been included with regard to any future events that may be cited as a reason by either Party to seek cessation of cooperation or termination of the (123) Agreement.' The letter states that the US right to suspend all supplies forthwith is unfettered.

The key word is 'consultation', not concurrence or capitulation. When you say you will consult, it means you will be willing to consider the opposite side's perspective without giving up your own prerogative to do as you please. That is exactly the position here - if India conducts a nuclear test, both sides will talk but that does not mean the US cannot walk away from the deal if it so desires. The letter also only talks of the US' right to cease all nuclear cooperation with India immediately while also noting that the agreement can only be terminated on one year's written notice and 'notice of cessation has to precede cessation of cooperation...' Again there is absolutely nothing in it to suggest that the US intends to abrogate the understanding prematurely.

The letter makes clear that the 123 Agreement has granted India no right to take corrective measures in case of any fuel-supply disruption. Rather, India's obligations are legally irrevocable. It further indicates there is no link between perpetual safeguards and perpetual fuel supply. Contrast this with what the prime minister claimed in Parliament on August 13, 2007: 'India's right to take "corrective measures" will be maintained even after the termination of the Agreement.' Or the prime minister's repeated assurances to Parliament since March 2006 that India's acceptance of perpetual international inspections will be tied to perpetual fuel supply.

The point about the lack of any link between perpetual safeguards and perpetual fuel supply has been mentioned over and over in this debate. This is not a new concern and the answer depends again on what the phrase 'corrective measures' means. So long as no one has defined it (which is still very much the case), it is hard to definitely answer one way or the other. Chellaney's guess is therefore as good (or bad) as any.

The Bush administration's letter states that the 123 Agreement fully conforms to the Hyde Act provisions. In a press release recently, the Prime Minister's Office made the following claim on July 2, 2008: 'he 123 Agreement clearly overrides the Hyde Act and this position would be clear to anyone who goes through the provisions.'

I have stated in previous posts my own discomfort with this assertion by the government. The word 'override', as I understand it, is generally used only when there is a conflict between two things - in that sense, the government's claim is false because the US has repeatedly stressed 'conformity' with the Hyde Act. Even M.K.Narayanan initially said that the agreement had been drafted in such a way as to ensure consistency. Only when allegations of capitulation to the foreign policy goals laid down in the Hyde Act began to surface, the Manmohan Singh government changed tack and insisted on making this dubious claim.

The US Supreme Court ruled a long time ago in Whitney v. Robertson that in the event of a conflict between an Act of Congress and a treaty with a foreign country, that which is later in date will prevail. That position remains the law to this day. So the argument appears to be that once the NSG waiver is obtained and the agreement is formally adopted by Congress, the Hyde Act will no longer be relevant. However, this argument too does not hold a lot of water for two reasons: if the agreement is written in a way as to ensure consistency with the Hyde Act, a legal dispute will not arise at all in the first place. Secondly, before one can be said to override the other, the first impulse of any legal authority will be to endeavor to construe the two legislations in such a way as to give them both effect (this point has also been emphasized by the US Supreme Court). Thus, on both of these grounds, the government's claim is questionable. Moreover, as I mentioned before, such questions pertaining to foreign policy are usually political decisions and such legal technicalities are often secondary. If the President decides to penalize India, none of this legal quibbling is likely to matter much to our case.The point here is however that this letter does not change any of this.

The letter assures Congress that the 'US government will not assist India in the design, construction or operation of sensitive nuclear technologies.' That rules out not only the transfer of civil reprocessing and enrichment equipment or technologies to India even under safeguards, but also casts a shadow over the US granting India operational consent to reprocess spent fuel with indigenous technology. Under the 123 Agreement, India has agreed to forego reprocessing until it has, in the indeterminate future, won a separate, congressionally vetted agreement.On one issue, the 123 Agreement had held out hope for India in the future by stating in its Article 5(2) that, 'Sensitive nuclear technology, heavy water production technology, sensitive nuclear facilities, heavy water production facilities and major critical components of such facilities may be transferred under this Agreement pursuant to an amendment to this Agreement.' But the Bush administration's letter to Congress states that the US government had no plan to seek to amend the deal to allow any sensitive transfers.

Contrast this with what the prime minister said in Parliament on August 17, 2006 -- that India wanted the 'removal of restrictions on all aspects of cooperation and technology transfers pertaining to civil nuclear energy, ranging from nuclear fuel, nuclear reactors, to reprocessing spent fuel.' Lest there be any ambiguity regarding this benchmark, he added: 'We will not agree to any dilution that would prevent us from securing the benefits of full civil nuclear cooperation as amplified above.' Earlier, on August 3, 2005, he told the Lok Sabha that he had received 'an explicit commitment from the United States that India should get the same benefits of civilian cooperation as (an) advanced country like the United States enjoys.'

This point too has been debated extensively in the past. This fact that the US may not be able to provide us the technologies we seek was well known. The argument has been that once this waiver is concluded, we will be able to attempt to buy from other sources what the US may not be willing to give us. Again, there is nothing in the letter to alter any aspect of this issue.


Gandaragolaka said...

I have been following Chellaney's articles since the past few months and it seems he is the only strategic analyst who is against this deal. Its not like he doesnt understand how to read the language of the draft of a deal to be siged between two countries.

Wonder what "bad" he sees in this deal...

Pilid said...


Even some other analysts seem to have turned deeply skeptical about it. See Siddharth Varadarajan's piece on his blog today. Also R.Ramachandran has been gradually leaning more and more against it. This is apart from the party spokesmen like Yashwant Sinha and Arun Shourie (Sinha's point repeated ad nauseum about the 123 agreement overriding the Hyde Act is correct of course). So I do think that Chellaney is not alone in this. He definitely has company.

Hindu Fundamentalist said...

i might have read the text differently but i see the pm has repeatedly lied to the country on issues of nuclear testing. the nsg cartel is also pretty much agreeing to stop an nuclear trade if india tests.
and there is no tangible technology transfer.
i have my reservations on the nuclear deal in its present form.

Anonymous said...

See this NDTV program and listen to Arun Shourie

He makes some important points.

And of course he teaches Barkha Dutt what is journalism :-)

R said...

Pilid, you said:

"The US has not said that it will not allow India to build a strategic reserve"

The hyde act clearly says the following:

"Any nuclear power reactor fuel reserve provided to the Government of India for use in safe guarded civilian nuclear facilities should be commensurate with reasonable reactor operating requirements."

What does that mean ? It simply means that we will not get anymore fuel than what we need for our "reasonable reactor operating requirements". Note the word used is "commensurate" -- which, according to M-W dictionary, means: "equal in measure or extent".

So they are very clear. They will not give us fuel to build strategic reserve.

So wasn't PM misleading the parliament there ?

Anonymous said...

The above link on NDTV program with Arun Shourie may not be the right link. There was a program by Barkha dutt with title: "Is UPA guilty of lack of transparency". I am not able to get the right link for that (please try googling with the title, you might get it)

And it was an interesting program, related to N-deal, where Shourie makes many interesting points; he also tells Barkha that what she does is "shouting" and not journalism and advises her what a serious journalist should do!
And I loved seeing her funny face when she was cornered

Pilid said...


Strictly speaking, the PM has not lied to the country (you can read Kakodkar's statement yesterday in The Hindu which reflects the correct position with respect to testing). However, if India intends to actually conduct a nuclear test in the future, one could make a plausible case that this is a bad deal - in any case, it is doubtful that India will be able to shield itself from the consequences of such testing. There is a good possibility that should we test, we will find ourselves not only in the same predicament we were in following Tarapur but worse now that we are expected to have far more reactors than at that time.

The calculation of the Indian government appears to be that we are not going to test in the future (again that is contigent upon our neighbors not doing so; Pakistan will not test again unless India does and China is probably not going to either because of the wide ramifications of violating the moratorium that all countries have agreed upon). The Vajpayee government repeatedly said that we would voluntarily adhere to the moratorium and it appears that the current government is therefore willing to build further upon that premise.

Those who believe that India should retain the relatively unfettered right to test again would therefore be justified in opposing the deal.


The phrase 'reasonable operating requirements' can be defined as extending to the lifetime of the reactor. Doing that would enable building a strategic reserve without violating the terms of the Hyde Act. Whether that is how it will eventually come to be defined still remains to be seen.


I watched the NDTV program anchored by Barkha Dutt. I recall two points that he made: (1) this agreement does not override the Hyde Act and (2) the letter is not of much consequence. I agree on (1). On (2), he is right of course but that does not mean that the letter is erroneous in any way. I believe that the letter's contents represent standing US policy.

R said...

The phrase 'reasonable operating requirements' can be defined as extending to the lifetime of the reactor.

According to this new secret letter, this term "'reasonable operating requirements" is not yet defined. So it can be defined either way depending on what the US administration thinks (the supplier). Now, no prize in guessing how Obama will define it. His amendment to the Hyde act opposed giving India the right to build strategic fuel reserves! So we all know how it will turn out!

Pushing all these facts under the carpet PM claimed the US support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply for the lifetime of India's reactors.

My point is: you can't make claims over things that are not even defined! That's what we call misleading!

Pilid said...


Your point is well taken - since neither of the two terms have been defined, the PM's assurance, especially that the Tarapur experience would not be repeated is dubious. At best, one could say that it is premature.

But this agreement will only start to bear fruit and have consequences once the agreements with respect to individual facilities are concluded. It is possible that the US has given some assurances that are not acknowledged in this letter about the scope of a strategic reserve. We will know for sure only at that time what the scope of these fuel supply assurances are. It is worthwhile to wait until then.

Dirt Digger said...

I've not read the letter and following analysis in detail, but despite the US Govt.'s covert statements, once the NSG approves shouldn't India get the material it needs from the market. then its just a matter of forging the accounts.
just my 2 cents.

Hindu Fundamentalist said...


i would like to make distinction here between the politics surrounding the deal and the benefits coming out of the deal. undue attention is paid to the politics part.

if the pm indeed not make such assurances, then we should never have approached the iaea in the first place. the objections raised by the opposition all along are valid. the reasons have already been listed quite elaborately by brahma chellany in his earlier articles. for example,
there is no technology transfer
the iaea inspections are perpetual
nuclear cooperation is conditional
fuel supply is not conditional
india makes firm commitments in return for america's vague assurances
america's benefits out the deal are clear and tangible
india's benefits from the deal and contingent and restrictive
nsg is no more accomodative than usa

all the u.s. lobbying reminds me of the enron scandal.

the stakes are probably high for u.s but not so much for india. u.s is already into recession. failed deal will have a severe overall impact. i suspect, the strong dollar and weakening rupee equation might change if the deal falls through.

india needs nuclear energy but not a bad deal. we can afford to wait until we get a good one. in the meantime, we should renew our efforts on alternative sources. bottomline is we dont need to rush into this deal.

Pilid said...


You are correct. Once the NSG approves the draft, I do not thing that anything should stand in the way of India being able to buy from the markets. Congressional approval is required for the US-India civil nuclear cooperation initiative but I do not see that as a requirement for us to buy anything from other countries. The Hindu however reported that for this reason, the US, in order to avoid losing out on lucrative deals, has secured an understanding with the other big powers to delay concluding any deals with India before Congressional ratification.


You are entitled to that view. But it is important to remember that firstly, given our situation, it is extremely unlikely that we are going to get a better deal; secondly, the trade-off here is a reasonable one; thirdly, the objections have either been adequately addressed or are expected to be addressed in future; fourthly, without US help, we will almost certainly never be able to secure an NSG waiver on our own - with less preconditions than there are currently, we can practically forget about it. Unless we are planning to conduct nuclear tests in the future, these aspects would make a strong argument in its favor. There is no doubt that minus this deal, our nuclear energy development will be set back. The only alternative is to give up on nuclear energy and seek other sources of power - coal, wind, solar, etc. Some like Sitaram Yechury and R.Ramachandran have made that argument. I have not seen any answer from the government's side to this suggestion. Nor have I have analyzed it in sufficient detail to be able to comment on the merits of this proposal.

My understanding is that the sort of nuclear power plants India is looking for are not unlike those already built such as at Kudankulam. If not the US, other countries will be willing to build it for us. Art. 5(2) essentially signals that transfer of sensitive technology to India is not something the US views as objectionable. The idea here seems to be to not try to go too far at one go - pushing for providing sensitive technology will inflame the non-proliferation lobby even further which can put a spanner in the works at this stage.

On the safeguards issue again, the issue of how India's prerogative to take corrective measures in the absence of fuel delivery is reconciled with the American interest in maintaining perpetual IAEA safeguards will probably get clarified further when the facility-wise agreements are concluded.