FAQ: Indo US Nuclear Deal - less energy, more hype

[This FAQ is from the Daily South Asian]

Will the nuclear deal provide nuclear fuel and reactors to India?

Contrary to the impression being created, the India US Civilian Cooperation Agreement is only a waiver allowing the US to trade with India on nuclear items. Any import of uranium or reactors will have to be separately negotiated with the US or other countries. The reason that this waiver is required is because after India's Pokhran I test, the US passed a law that barred the US from nuclear commerce with countries which had exploded a nuclear device and were defined as non-nuclear weapons countries in the Non-Proliferation Treaty.

How does the Hyde Act impact India?

The Hyde Act gives India a one time waiver and can be withdrawn by the US in case India does not abide the conditions of the Hyde Act. This includes any further tests and also a number of other issues not related to nuclear matters such as India aligning its polices with the US on foreign policy, working with the US on Iran, joining the Proliferation Security Initiative (PSI) that calls for illegal search and seizure operations in high seas. The US President has to report every year to the Congress on India's "good conduct" and if the US President or the US Congress is not happy, can either terminate or suspend nuclear trade with India. The Hyde Act also makes clear that India cannot get an uninterrupted fuel supply arrangement, cannot stockpile fuel and no other country can give better terms than the US in their nuclear trade with India. The Hyde Act also demanded that while India would not get uninterrupted fuel supply guarantees, it must put its civilian reactors under perpetual IAEA safeguards.

Since the Hyde Act is only an US Law, and the actual agreement with the US is the 123 Agreement, how is India is bound by the Hyde Act?

India is not bound by the Hyde Act, but the US is. For us, the 123 Agreement is a agreement with the US for supply of fuel and equipment. The key issue is how to bind the US as a supplier. The US officials are on record that the 123 Agreement ensures that all the Hyde Act conditions are met, the Government's contrary claims notwithstanding. "..we had to make sure that everything in this U.S.-India civil nuclear agreement, the 123 Agreement, was completely consistent with the Hyde Act and well within the bounds of the Hyde Act itself."(Nicholas Burns, Under Secretary for Political Affairs ?Washington, DC ?July 27, 2007).

The US has built into the 123 Agreement that it can pull out whenever it wants: the termination clause makes clear that if either party feels consultation preceding termination will serve no purpose, they can cease further co-operation. In case the US terminates the 123 Agreement, all fuel supplies will stop and all equipment has to be returned to the US. And as per the Hyde Act, the termination clause can come into effect on a broad range of issues including India's continued links with Iran. Therefore, India can be held to ransom over fuel and spare parts for its imported reactors as it was earlier for the two reactors in Tarapur.

Since the issue is our ability to bind the US as a supplier to give guaranteed fuel supplies and spares, no Indian Act passed by Parliament -- as some are arguing -- will help.

Did not 123 Agreement and the IAEA Safeguards Agreement provide for uninterrupted fuel supplies?

The UPA and the PM had assured the country that though the Hyde Act made fuel supply conditional and barred stock piling of fuel except to meet immediate operational requirements, fuel supply assurances would be there in the 123 Agreement and also corrective measures in case of fuel failure would be addressed in the IAEA Agreement. The fuel supply assurances in the 123 Agreement have now been exposed as hollow. The IAEA was held out as the hope for corrective measures, in case fuel supply fails. It is now clear that though the IAEA Draft Safeguards Agreement has perpetual safeguards as per the Hyde Act, the so-called corrective measures are purely cosmetic. There are no corrective measures possible that include pulling Indian reactors out of safeguards once they are offered to IAEA.

Will the Deal not help in lifting sanctions on India for nuclear technology and dual use technology?

The Hyde Act and subsequently the 123 Agreement is clear that sanctions on only uranium fuel and reactors will be lifted. All other technology sanctions -- fuel enrichment, fuel reprocessing, heavy water production and other dual use technologies -- will remain. Dual use technologies are those that are used not only nuclear areas but also other applications such as aerospace, precision manufacturing, electronics, weather prediction, etc. Thus advanced technology for our industries, air crafts, rockets, etc., along with nuclear fuel cycle technology, will continue to be under sanctions. This is in contradiction to what the PM had assured the Indian Parliament.

The Fast breeder Reactors would be regarded as fuel enrichment or fuel reprocessing facilities and would not get access to any technology. Therefore, the mainstay of our future indigenous nuclear energy program will continue under technology sanctions.

Will importing nuclear plants solve our immediate power crisis?

There is a deliberate misinformation being created that nuclear plants will be a quick fix to our huge shortages and power cuts. Nuclear plants have to have detailed studies regarding where and how to put them up and take a long time to build. The import of reactors have to be negotiated commercially and their fuel has to be guaranteed. Typically, the entire process takes 8-10 years. So even if we finish all the steps required to complete the India US Nuclear Deal, it will take not less than 8-10 years before any electricity is produced. And this is an optimistic figure; the last plant that the US commissioned -- the Watts Bar 2 Reactor -- took 23 years to complete. So the belief that nuclear energy will provide an immediate solution to our power crisis is a deliberate fraud on the people.

As against this, the coal-fired plants can be built in 3 1/2- 4 years -- we can build coal-fired plants in about half the time it would take for nuclear plants. Gas fired plants can be put up even faster and with the new strikes of gas in the Kaveri Godaveri Basin, use of gas for producing power quickly is an attractive option.

What is the reason for the power crisis in the country?

This crisis of the power sector is the result of a systematic attempt by successive Governments to starve the sector of public funds hoping to make high-cost private power more acceptable to the people. Instead of investing in the power sector, the Government has gone in for privatisation of the power sector with higher prices of electricity. In the 7th Five Year Plan, we had put in about 21,000 MW; in each of the 8th, 9th and the 10th Plans, we have added less than what we added in the 7th Plan. The net result has been the increasing bankruptcy of State Electricity Boards and converting what was a shortage of the early 90's to a full-blown crisis today.

If we now have enough money for the power sector, we need then to think on the quickest and cheapest way to remove the current electricity shortages while keeping all our options open.

Will the India US Nuclear Deal provide energy security?

The India US Nuclear Deal is not about India's energy security. Energy security lies in using indigenous energy resources such as coal, gas, hydro, etc., and ensuring our future energy supplies from Iran and other countries in West and Central Asia. Obviously, augmenting indigenous coal production, building hydro plants, investing in oil exploration, securing gas supplies through Iran Gas Pipeline are much more important for India's energy security than buying imported reactors and importing uranium for such nuclear plants.

If we do want to build nuclear power plants, we can also build these indigenously. The original three-phase nuclear energy program was based on indigenous fuel and indigenous technology and can give us nuclear energy without making us dependent on imported uranium and imported reactors.

The Government is pushing hard for immediately importing 40,000 MW of Light Water Reactors. Such a scenario would make India completely dependent on imported uranium, which is controlled by a small international cartel. It because of this cartel that the price of uranium has gone up by five times in the last few years. The US, which controls the uranium cartel, would be therefore able to dictate its terms as it will have a stranglehold over these 40,000 MW of nuclear plants.

What are the relative costs of building nuclear plants and coal fired ones?

The nuclear plants -- if we take the cost of imported reactors -- are about three times (Rs. 10-12 crore per MW) the cost of coal-fired plants (Rs. 4 crore per MW). Simply put, with the same amount of money, we can install three coal-fired plants against one nuclear plant of the same size. If we want to install 40,000 MW by 2020 with imported nuclear plants as the Government wants to do, with the same amount of money it can build 100,000 MW of coal fired plants, that too in half the time.

The French company Areva is building a new 1600 MW nuclear plant in Finland. When the estimates were made, Areva had given estimates of $ 2,000 per KW. By the time the plant was ordered, it had gone up about $ 2,800 per KW. Currently, the costs have already shot up to a mammoth $ 6.1 billion or almost $ 4,000 per KW. This is four times the cost of coal-fired plants and also more than twice that of indigenous nuclear plants built by Nuclear Power Corporation. At these costs, even solar energy using solar thermal plants would be competitive!

What are the comparative costs of electricity from nuclear and coal-fired plants?

The cost of electricity from imported nuclear plants is high because of the high capital cost. Even without including de-commissioning costs, storage of spent fuel indefinitely, etc., the cost of electricity from imported nuclear plants will be more than Rs. 5.00 per unit as against about Rs. 2.00 to 2.50 from coal-fired plants. The cost of electricity is therefore at least twice that from coal fired plants.

For those who might remember the Enron case, would know that at that time, India was pushed to accept expensive private power only to help Enron. Once Enron started to produce power, its cost of Rs.5-7 per unit sank the Maharashtra State Electricity Board. If a 2,000 MW Enron plant sank the largest State Electricity Board in the country -- the impact of pushing high cost 40,000 MW of nuclear energy using imported reactors, as the Government wants to do, may well be imagined.

How much can nuclear energy contribute to our energy needs?

Even if we decide to invest heavily in nuclear energy, its contribution to our total energy needs is of limited importance. India has installed capacity of 143,000 MW currently and is slated to raise this to 700,000 to 800,000 MW by 2032. Coal currently meets about 66% of our electricity generation. In this nuclear energy is only 3% of current capacity electricity generating capacity and will at best reach a figure of 8% by 2032. The primary energy source for India will remain coal, which we have in adequate quantities for the next 100 years.

Is there a nuclear renaissance in the world as the Government is claiming?

Nuclear power is not the energy of choice for most advanced countries. Nuclear renaissance is a hype created by the nuclear industry in the US, Western Europe and Japan. In all these countries, the total number of nuclear plants currently being built is only 3. This is against 20 new plants being commissioned every year in the heydays of nuclear energy in these countries.

The US itself has commissioned its last reactor in 1996 and has not licensed a new reactor now for more than 27 years. Its interest in supplying India with reactors is in order to revive its own dying nuclear equipment industry, which has yet to secure a single order in the US despite the promise of billions of dollars in subsidies from the Bush Administration.

It is in order to bail out its dying nuclear industry that the US is so keen that India sign on the Nuclear Deal. Condoleezza Rice, testifying before Senate Foreign Relations Committee (April 5, 2006), pointed out the importance of the Deal for the US, "The initiative may add as many as three to 5,000 new direct jobs in the United States and about 10,000 to 15,000 indirect jobs in the United States, as the United States is able to engage in nuclear commerce and trade with India."

Is there a serious uranium shortage in the country for which we need this Nuclear Deal?

The Department of Atomic Energy has always maintained that we have enough indigenous uranium for 10,000 MW of nuclear power for 30 years. We are not yet close to that number. The present mismatch in uranium availability for operating reactors is a consequence of poor planning, and inadequate prospecting and mining. If we focus on our know uranium deposits and prospect for new ones, there will be enough uranium for a robust indigenous nuclear power programme.

It is because of a smaller availability of indigenous uranium that the 3-phase program started under Homi Bhabha, envisaged Fast Breeder Reactors. Breeder reactors can produce 50 times more energy from the same amount of uranium. This program also planned to use thorium, which we have in abundance. India is a world leader in Fast Breeder technology and is very near to commercialising it. It is not surprising that this is precisely the time that people who have put India under nuclear sanctions for the last 30 years are now talking about making India a member of the nuclear club. A simple objective is to get India to give up its quest for independence in nuclear technology and fuel.

Will nuclear energy address the issue of global warming?

The Inter Governmental Panel on Climate Change, the most authoritative body on climate change has made clear that nuclear energy will have only a marginal impact on global warming. That is simply because its total contribution to the energy needs of the world would be relatively insignificant, even if we consider a very ambitious nuclear energy program. Therefore, the major thrust for reducing greenhouse gases would be greater energy efficiency, public transport, thrust for renewable energy sources and clean coal technologies.

Cynically, the US has been advancing the reduction of India's greenhouse gases as an argument for the India US Nuclear Deal. Nicholas Burns writes, "This agreement will deepen the strategic partnership, create new opportunities for U.S. businesses in India, enhance global energy security, and reduce India's carbon emissions" (Foreign Affairs, Nov/Dec 2007). It is strange that this argument is being advanced when India's per capita emissions are one twentieth that of the US, which has yet to accept a cap on its own greenhouse emissions. The US position is that if the world is endangered by greenhouse emissions, it is countries such as India and China that need to limit their emissions. For the US, no reduction of greenhouse gases is possible; George Bush senior expressed this quite clearly, "American lifestyles are not open to negotiations".

Will investing heavily in nuclear energy reduce our dependence on imported oil and therefore reduce the burden of rising oil price?

Oil and gas, in primary energy terms, are much more important than nuclear as they are already about 45% of our primary energy demand. Oil alone is about 35% of our primary energy demand of which more than 50% is in the transport sector -- cars, buses and trucks and the rest in petrochemicals and fertilizers. Nuclear energy, in contrast is only 1.5% of our primary energy demand. Only a negligible amount of oil -- less than 3% of the total oil consumption -- is used in the power plants. Nuclear energy cannot be used as a substitute for oil except for this 3%; unless the Government experts have found a new way to burn uranium directly in cars and buses!

Though nuclear energy cannot be used in transport, natural gas can -- as we can see in the large number of buses and cars that run on CNG in Delhi. It is indeed strange that the Government, faced with a huge and ever rising oil bill, should focus on the nuclear deal while ignoring the Iran Gas Pipeline project, which will partly insulate India from oil price shocks. It only makes sense if we understand that one of the objectives of the US is to de-link India from Iran through the nuclear deal. "Diversifying India's energy sector will help it to meet its ever increasing needs and more importantly, ease its reliance on hydrocarbons and unstable sources like Iran. This is good for the United States." (Condoleezza Rice, testifying before Senate Foreign Relations Committee, April 5, 2006).

About 13,000 MW of gas-fired plants are partially idling as we also have a shortage of gas in the country. If we had gone ahead with the LNG or the Iran Pipeline project, we could have removed some of the electricity shortage we have in the country today.

How is the nuclear deal related to the India US Strategic ties?

The Nuclear Deal is a part of a larger vision which seeks to subordinate India to the US's strategic vision. For the last two years, the Government has been taking a number of steps that align India to the US's strategic interests. It is known that the US strategic thinking calls for dominance in all possible theatres. In Asia, the US has been handicapped that it has only one major base -- Okinawa, Japan -- in East, South-east and South Asia. The only other base it has in this region is in the Indian Ocean in Diego Garcia. That is why the US's interest in making India as a junior partner in Asia.

One of the major steps was signing of the New Framework for India-US Defence Relationship in Washington on June 28, 2005, just prior to Bush Manmohan Singh Agreement of July 18, 2005. In the Agreement, it is stated, "U.S.-India defence relationship derives from a common belief in freedom, democracy, and the rule of law, and seeks to advance shared security interests". Considering that the Iraq invasion was justified by the US as "bringing democracy to West Asia", a reference to a shared belief in "democracy and rule of law" cannot be acceptable to the Indian people. The Defence Framework Agreement is also sweeping in its scope; it envisages a host of strategic and military relations -- joint exercises, joint planning, joint operations, and defence procurement. India has also joined in with the US, Japan and Australia (or what is called the trilateral nations) for naval exercises in the Bay of Bengal, as a part of this.

The Manmohan Singh Bush agreement was followed immediately by India's two votes against Iran in the International Atomic Energy Authority (IAEA). Senator Lugar in his opening remarks in the Senate Foreign Relations Committee had noted, approvingly, "We have already seen strategic benefits from our improving relationship with India. India's votes at the IAEA on the Iran issue last September and this past February demonstrate that New Delhi is able and willing to adjust its traditional foreign policies and play a constructive role on international issues." Manmohan Singh's oft-repeated claims that India's foreign policy would not change due to this Deal, is not borne out by his Governments' record, especially when the US officials are busy selling the agreement to the US Congress on the strategic value of India aligning with the US as a consequence of this agreement.

Currently, the Manmohan Singh Government is negotiating a Logistics and Service Agreement. It essentially allows refuelling and complete access to Indian facilities for all US ships and aircraft. The US navy can bomb Iraq and Iran and then come to India's ports for rest, recreation and refuelling, before going back for another round of hostilities. Step by step, from a vote against Iran, we are now to become hosts to the US navy in US-Israel military misadventures in West Asia.

Launching the TecSar spy satellite for Israel, which is being used to plan military attacks on Iran and Syria, show the depth of the strategic ties that India already has developed with Israel. India is not only Israel's biggest arm-buyer, it also buys more arms from the Israeli arms industry than the Israeli defence forces.

The Logistics and Service Agreement as well as the Defence Framework Agreement have also requirements of "interoperability". This calls for both sides to have the same equipment so that military personnel of both sides can use each other's equipment and operate better together. This also means spares can be shared by the two sides. That is why such agreements invariably lead to buying of US arms, particularly expensive aircraft and missiles. Billions of dollars of aircraft and missile sales is now in the offing -- F16 Aircraft, missile systems and ships.

COMMITTEE FOR AN INDEPENDENT FOREIGN POLICY
NEW DELHI