The landmark civil nuclear agreement that the two countries signed in 2008 was supposed to lead to tens of billions of dollars in business for U.S. companies that build nuclear power plants. But it has not yielded anything except a disagreement over who would be liable in the event of a nuclear accident.

The nuclear deal was seen as the cornerstone of the broader strategic partnership between the two nations. Both countries are wary of China’s growing influence, have fallen victim to Islamist extremism emanating from Pakistan and share a commitment to rebuilding Afghanistan.

But at the same time, each pursues its own independent strategic agenda. India’s unwillingness to join international sanctions against Iran — which New Delhi sees as an important oil supplier — and its reluctance to intervene in other countries’ internal affairs — in Libya and Syria,?for example — are among the many wrinkles in the relationship.

India’s decision in January to buy 126 fighter jets from France’s Rafale for $11 billion instead of its American competitors was a major disappointment in Washington, though high hopes persist for business between the world’s largest weapons buyer and many of the world’s largest defense contractors, based in the United States.

Trade between the two countries is growing fast and reached $100 billion in 2011, but it is dwarfed by trade with China and remains a fraction of what most people see as its long-term potential. Indian concerns about U.S. agricultural policies that subsidize farmers and restrict imports are matched by American concerns about market access and jobs being outsourced to India.

Simon Denyer, "Promise of U.S.-India economic partnership remains unfulfilled", Washington Post, May 3, 2012.

Glad reporters are noticing - we've been banging this drum for a while!

Read more

Nukes on a Blog, U.S.-India deal, quote of the day (all tags)

Reading through the news this morning, I came across a headline in the Washington Post that got me to thinking about the U.S.-India civilian nuclear cooperation agreement:

"France to sell Rafale figher jet to India"

The long and the short of the story is that India inked an $11 billion deal with France for 126 Rafale fighter jets. We've known since last April that New Dehli had ruled out purchasing planes from U.S. defense firms (i.e. Boeing and Lockheed Martin).  It's also true that the U.S. and India have concluded other defense deals and more sales are being considered.

But many proponents of the U.S.-India deal argued at the time the pact was being consummated that it would create lucrative new markets for U.S. defense and nuclear business.  This hasn't exactly turned out to be the case.

Speaking of nuclear business, U.S. companies have still not yet started nuclear trade with India and may be reluctant to do so if New Delhi does not resolve concerns regarding its policies on liability for nuclear reactor suppliers in the event of an accident.

As you may remember, we were quite skeptical of the deal on nonproliferation, national security, and economic grounds when it was an issue before Congress in 2007 and 2008.  Last June, Michael Krepon provided an assessment of the status of the implementation of the agreement to date, and asked whether in retrospect supporters or critics of the deal had the better argument.

According to Krepon, "So far, U.S. backers of the deal have...been proven wrong on every count." It's difficult to disagree.  

UPDATE 2/2: For more on why the current U.S. approach to civilian nuclear cooperation in general doesn't appear to make much sense, see my post from last week here.

Read more

Nukes on a Blog, U.S.-India deal (all tags)

U.S. President Barack Obama’s trip to India last week undoubtedly carried a message pointed straight at China. By underlining the importance of and building strategic partnerships with Beijing’s regional rivals, the apparent objective is to bring down China’s role and growing influence amid a bilateral dispute over the yuan’s exchange rate. Where does India fit in? It’s seen as a counterweight to China and the two countries have been long-time competitors. All this, on top of the obvious U.S. objective to deepen relations with the world’s largest democracy, a big security partner on counter-terrorism, and enormous market on which American businesses can thrive. So, it’s apparent that Washington is treating India as a responsible power and ally to American interests after having never been regarded as a possible ally in the second half of the 20th century.  National Security Advisor Thomas Donilon told reporters on Air Force One, “President Obama intends this trip to be — and intends our policy to be — a full embrace of India’s rise.”

Yes, the world and international relationships are constantly evolving, so policies should be crafted (sometimes revised) to fit new realities of the time and the future. However, on the nuclear front, we must remember some facts from history, near and distant, as well as the implications. Click "read more."

Read more

U.S., U.S.-India deal, NSG (all tags)

On March 29, the U.S. and India reached an agreement which grants India the right to reprocess U.S.-origin spent fuel, meaning that the landmark U.S.-India nuclear trade deal is one step closer to reality.  The text of the agreement was released on March 30.

The reprocessing agreement includes protocols intended to prevent the diversion of U.S.-supplied nuclear materials to India’s weapons program.  However, the agreement - like the larger deal it is a part of - increases the potential for proliferation and nuclear terrorism…

Read more

Nukes on a Blog, U.S.-India deal (all tags)

Critics of the U.S-India Deal have long warned that not only did the arrangement have the potential to undermine the global nonproliferation regime, but it would also make it more difficult to say no to other countries, particularly Pakistan, demanding the same treatment in the future.  Unfortunately, the critics’ worst fears are now becoming reality…

Read more

Nukes on a Blog, U.S.-India deal, Pakistan (all tags)

As I blogged in late February, there has been progress toward implementing the U.S.-India Nuclear Deal.  I also pointed out that obstacles remain to the deal’s entry into force, including completion of an agreement regarding a nuclear spent fuel reprocessing facility and approval by New Delhi of a liability limitation bill for U.S. firms.

With the news last week that the government decided not to introduce the Civil Liability for Nuclear Damage Bill in the Indian parliament, there is still no telling when U.S. firms will be able to start reaping the benefits from nuclear trade with India.  The tragic comedy that many opponents of the deal warned it would become seems to be playing out as predicted: U.S. efforts to rewrite the rules on international nuclear trade are likely to end up benefiting firms in Russia, France, and other nations much earlier (and perhaps even far more) than their U.S. counterparts…

Read more

Nukes on a Blog, U.S.-India deal (all tags)

In early February, President Obama issued a memorandum certifying that India has placed its civilian nuclear facilities under IAEA safeguards, thereby bringing the Indian Safeguards Agreement into force and moving the two nations another step closer toward cooperation in the field of nuclear energy under the auspices of the landmark U.S.-India deal.

Yet while progress is being made toward implementing the agreement, a few steps remain before U.S. firms such as Westinghouse Electric and G.E. Hitachi can begin nuclear trade with India...

Read more

Nukes on a Blog, U.S.-India deal (all tags)