[Reader-list] Behind The Deal

[Pawan Durani]

http://www.outlookindia.com/full.asp?fodname=20070827&fname=sazawal&sid=1

  *An account of the journey in the murky world of Track-II diplomacy that
went into the clinching of the US-India Nuclear Deal on July 20, 2007 in
Washington -- two years and two days after the initial breakthrough in the
same city.* [image: ...]<http://www.outlookindia.com/dossiersind.asp?id=687>
*Vijay Sazawal*


On January 4, 2006, I was holding a routine meeting with the political
section of the U.S. Embassy in Chanakyapuri, New Delhi, to discuss local and
regional dimensions of the Kashmir situation, when a young man (who I later
found out to be from the political military section) came up to me to say,
"DCM wants to see you immediately." I did not appreciate the interruption,
but then one is not invited by the Deputy Chief of the Mission (a sort of
deputy Ambassador) without a good reason. So I got up and followed the young
man to meet with his boss.

The DCM came to the point quickly, "Vijay I understand you are meeting with
a member of the AEC. We are in tough negotiations with India on the
Separation Plan, and I want you to convey our concerns to him in an
unofficial way." It so happened that the Indian gentleman that I was
planning to meet was a member of India's nuclear security advisory team and
I was meeting with him specifically to discuss the uncertain fate of a few
thousand Kashmiri Pandits (KPs) still living in the valley. Indeed, my
motivation was driven by the desire to know how the proposed India-Pakistan
peace deal on Kashmir would impact remaining Pandits who lived under trying
conditions on Ground Zero. Much like in the US, the Indian national security
and nuclear establishments also share a common fraternity and it is not
unusual for experts to be involved in matters affecting both domains.

Thus began my journey in the murky world of Track-II diplomacy, brought
about by rapidly improving bilateral relationship between the US and India.
To put the events in the correct perspective, it should be recalled that
President Clinton and Prime Minister Vajpayee set the new tone of the
bilateral relationship that was further nurtured by successor governments in
both countries, leading the way to a momentous meeting in the White House on
July 18, 2005.

On that day in the summer of 2005, President Bush and the visiting Indian
Prime Minister Manmohan Singh had issued a declaration after a Summit
meeting in which, among other actions, they had agreed to initiate an
"Energy Dialogue" between the two countries. As part of that dialogue,
President Bush had pledged to support the Indian civil nuclear development
by seeking an exemption for India from the US Congress and global entities
that prohibited nuclear trade with India.

India had been isolated internationally in regards to the nuclear commerce
since its Pokharan tests, and while its success with its weapons program was
a source of great pride within India, the progress on power generation side
was less than exemplary. The Prime Minister, to his credit, did not wish to
sweep such anomalies under the rug--as an economist he knew that a robust
civilian nuclear program is essential to India's growth as a global economic
powerhouse. The US, for its part, wanted to build a strategic partnership
with India, and those who know how the American security establishment works
will tell you that a meaningful strategic relationship is impossible as long
as India is on the "Entities List" identifying countries deemed hostile
under the US law for specific improprieties (in case of India for not
signing the NPT). US Presidents can grant case-by-case waivers in some
exceptional cases to circumvent the US law, but changing the law for good
was the only way to secure a strong and stable relationship between the two
countries.

Largely unwritten and ignored (some would say self-censored) in the Indian
press is the slow progress made in nuclear power production in India  In
spite of having unlimited resources from the central government for the last
60 years, unheard of decision authority--Chairman of the Atomic Energy
Commission (AEC) reports directly to the PM--and the best intellect that AEC
can muster, nuclear power only contributes a meagre 3% to the national
electricity grid in India. Even wind energy, that no one in India even talks
about, generates nearly double the electricity in India when compared to the
high visibility nuclear power.

Lack of adequate uranium, poor quality of uranium, and technical challenges
of the thorium fuel cycle have contributed to India's slow progress in the
civil nuclear power development. I am tempted here to recall a statement
made by Admiral Rickover, the father of US nuclear submarine fleet, who once
said, "The best and safest reactors are the one designed on paper. Show me
the performance of that reactor after construction and then I will tell you
if it is the best or safe." Lots of Indian nuclear power plans for the
future are still on paper or in a demonstration phase. That does not mean
such projects can not be successful, but to a prudent executive running the
country or its nuclear establishment, it simply means that one better have a
Plan B on stand by.

Following the July 18, 2005 summit between the US and India where the two
countries pledged to shift the paradigm by establishing civil nuclear
cooperation, I had a personal "outing" of a sorts as well. Being part of the
US nuclear establishment for over three decades (working on advanced
reactors, breeder reactors, space based reactors, reprocessing, enrichment
and a few other programs deemed "black", i.e. classified), I was trained to
mention my nuclear affiliation only on a need-to-know basis. In other words,
when meeting with the US Administration, Congressmen, US Embassy staff in
India or Indian officials, including those in the Indian Embassy in
Washington, whenever I met to discuss the Kashmir problem or the plight of
Kashmiri Pandits, I never discussed my professional expertise. Whenever I
would be asked, I would merely say that I work for a global energy company.
But after July 18, that veil of anonymity was lifted for good.

On August 16, 2005, the US Department of Energy (DOE) brought together a
small group of interagency officials from the Commerce Department, the State
Department and the National Nuclear Security Administration (NNSA), along
with a small number of companies already doing business in India, to discuss
commercial aspects of any follow-up to the July 18 summit. My company, being
the sole American supplier of nuclear enrichment, was also invited as a
technical observer. I represented my company, and the reason my company
selected me was because of my experience and knowledge of all aspects of the
nuclear fuel cycle, including policy issues affecting nuclear cooperation
between the US and India. (In fact, I had previously worked on such
commercial cooperation agreements in Eastern Europe--Czech Republic,
Bulgaria and Ukraine--after the fall of the Soviet Union.) The meeting at
DOE ended with some firm commitments on advocacy for the US-India
cooperation (certain non-proliferation and anti-India lobbies in the US
Congress were already up in the arms), and I became a regular participant in
similar meetings at the Commerce Department.

After receiving a briefing at the American Embassy on January 4, 2006, I
kept my appointment with the AEC official and argued in favor the US
position as it coincided with my own belief that India had to do more on the
Separation Plan than what they had come up with initially. I later found out
the initial Indian proposal on the Separation Plan was a slight modification
of the previous position that Mr. Brajesh Mishra (the NSA in the Vajapayee
government) had presented to the US.
While talks on nuclear cooperation never took off during the Vajapayee
government, it maintained a carefully crafted public relations image that
made Indian public feel that a special relationship on a strategic alliance
was in the making when in fact every knowledgeable person knew that such a
relationship would be impossible without a nuclear cooperation agreement.
Anyway, the gentleman listened to my arguments and promised to carry the
message back to his colleagues. On the same day, an official US-India
nuclear workshop took place in Mumbai, with DOE and DAE technical experts
following up on the US-India Energy Dialogue, which was led by David Garman
(Under Secretary of DOE) and Shyam Saran (Foreign Secretary).

At the American Embassy, another issue came up for discussion. In selling
the nuclear cooperation agreement to the US Congress, our political
counselors wanted to know how many jobs would be created in the US by this
deal since that sort of information becomes a selling point with the
Congress. I did not recall seeing such an analysis, but I promised them
follow-up after my return to the US.

On January 27, 2006, Under Secretary David Garman briefed the US India
Business Council (USIBC), consisting of US companies interested or already
investing in India, about the Mumbai meeting and I raised the issue of job
creation in the US under the US-India nuclear deal. The question took him by
surprise and he consulted with his aides who told him no such assessment had
been done, and he in turn challenged the US industry to make such an
assessment since it had the knowledge of the US market. Before the meeting
was over, I somehow got stuck with the responsibility and I was asked to
prepare a report within a week.

On January 30, 2006 I turned over my draft ("for review") to a small group
of reviewers at DOE, State Department, Commerce Department and the USIBC. My
document was brief (3 pages) and I outlined how the Indian 3-stage nuclear
program was insular from the global nuclear fuel cycle and Indian plans to
purchase a total of eight (8) 1,000 MWe foreign reactors by 2020 was
dictated by bridging the gap between current and planned indigenous nuclear
power production, and the 2020 Plan. I also concluded that India was already
discussing sweetheart deals with the Russians and the French, and US vendors
could hope to receive at the best, in the near-term, offers for up to two
(2) reactors (assuming all institutional approvals, including the exemption
from the Nuclear Suppliers Group, were in place).

Needless to say, the report caused great angst among the policy makers but
none could challenge my analysis. So the effort was redirected at convincing
India to buy more reactors from the US since it was the US--not the French
or Russians--that were helping them out of their nuclear isolation.

The American Embassy did an excellent job of educating visiting American
legislators about the issue and the Prime Minister solved the problem in
India's own unique way, the 20 GWe 2020 Plan was replaced by the 40 GWe 2030
Plan. The present plans were left intact and simply augmented by additional
purchases. A declaration was made that India's booming economy will require
more than 8 foreign reactors in the next two decades and some of these
reactors will be supplied by America. I still personally believe the first
reactor purchases by India after the NSG lifts its embargo will be French
and Russian reactors, but only time will tell.

On March 2, 2006, President Bush during his historic visit to India signed a
joint statement with the Indian Prime Minister advancing the goal of civil
nuclear cooperation between the two countries by identifying specific
actions that each country will take.  The President, during the press
conference, specifically spoke about advantages of the "closed fuel cycle"
involving reprocessing that India was pursuing.

On March 7, 2006, a member of the US negotiating team called me and sought
the paper that I had written in January 2006 on job creation. I thought
nothing of it until I saw Dr. Condoleezza Rice's Op-Ed piece in the *Washington
Post* on March 13 titled, "Our Opportunity With India.". When I saw my
conclusions directly reproduced in the article, I checked and confirmed that
my paper was the source for that information.

The Prime Minister, to allay fears of anti-American communist party and the
main Opposition, reiterated in the Parliament on August 17, 2006 that India
will seek full civil nuclear cooperation with the US, including reprocessing
rights. Discussions on the bilateral nuclear cooperation agreement (also
called the "123 Agreement") between India and the US were already underway.

A day earlier, on August 16, 2006, Frank Lavin, the Under Secretary for
International Trade in the US Department of Commerce called a meeting with
various representatives of the US nuclear industry to discuss steps that
industry could take to strengthen the agreement that the President had
signed with the Prime Minister in March. We all agreed that a Mission to
India, which was already being planned under his leadership, should be
broadened to include nuclear cooperation. In our case, however, since no
nuclear commerce was authorized, the US nuclear industry would meet with
Indian policy makers and the nuclear establishment, and would hold
exploratory contact with Indian industry interested in the nuclear trade,
though India by law does not permit the private sector to own or operate
nuclear reactors. Besides the restriction on the private sector, another
major impediment in the nuclear commerce is the absence of a law to cover
nuclear liability in case of severe accidents. In our discussions with the
Department of Energy (DAE) and the Prime Minister's Office (PMO) we were
told that the Indian Atomic Energy Act is in the process of being revised to
accommodate such changes.

The US delegation visited India from November 28 through December 6, 2006.
It was a well publicized visit that attracted significant media attention in
India especially since both the House and the Senate had voted
overwhelmingly in support of granting India an exemption from the US laws
that blacklisted the country for not signing the NPT. Following our visit,
the two bills were reconciled and the US-India civil nuclear cooperation act
was voted by the House of Representatives on December 8, 2006 by a margin of
330 to 59 and by the Senate through a voice vote on December 9, 2006. The
President signed the bill into law on December 18, 2006.

While these positive actions were underway, it was become increasing clear
that US and Indian technical negotiators had hit a road block on way to
finalizing the 123 Agreement. Officials from both sides expressed
frustration with the other; each blaming the other for intransigence. We got
a sense of this frustration during our next visit to India in the first week
of March 2007 for a meeting of the executive group on nuclear industry
cooperation. Indian officials were adamant (technically and politically)
about why reprocessing rights were essential to the success of the Indian
civil nuclear program.

In our March 8th meeting with Dr. Kakodkar, Chairman of the AEC, he made a
point of telling us that India was willing to put the reprocessing facility,
that would handle foreign origin fuel, under IAEA safeguards.But when that
message was conveyed to a White House specialist on nuclear matters, the
response was that our (U.S.) team was not authorized to talk about
reprocessing rights with India and we had received no formal proposal from
India. In response to the inquiry, "Why don't you ask for such a proposal?"
her response was, "Our negotiating team does not have the authority to seek
such a proposal." In other words, the outlook for a closure looked very
bleak.

Following the US industry team's return from India, I was asked by the USIBC
to assess how the main irritants between the two sides would impact the US
industry in pursuing nuclear commerce if somehow the deal was finalized. In
my summary report I listed three major items (there were many lower tier
issues as well). These were: fuel supply assurances, reprocessing rights and
future nuclear testing. I also concluded that among the three, only
reprocessing rights put American companies at a commercial disadvantage over
our competitors from France and Russia, and hence it should be the one that
the US industry must strongly recommend for consideration in order to
provide a "level playing field". Subsequently, the USIBC team met with Under
Secretary Nicholas Burns on April 17 (ahead of his negotiating trip to
India) and while he confirmed the three major issues being the same as
stated in my report, he was not encouraging vis-à-vis the industry position
on reprocessing rights. He asked us for new ideas that would help the US
industry compete successfully.

It is my personal assessment that the decision to give programmatic consent
on reprocessing to India was prompted by the position put forth jointly by
German, French and Russian leaders to President Bush during the G-8 Summit
in Heilingendamm, Germany, held on June 6-8, 2007. The Indian Prime
Minister, accompanied by the National Security Advisor, met with the
President and his national security advisor (Steve Hadley) on the sidelines
and presented a concept paper on the IAEA safeguarded reprocessing facility.
India already has three modest size reprocessing facilities and is planning
to build two more. One of those facilities will be now part of the civilian
nuclear sector.

It did not take a long time for the negotiations on the 123 Agreement to be
completed thereafter. The Indian team consisting of Mr. M. K. Narayanan, Mr.
Shiv Shanker Menon, Dr. Anil Kakodkar, Dr. Venkatesh Verma, and Dr. Ravi
Grover, joined by their colleagues in the Indian Embassy in Washington met
with the US negotiating team that included a brief intervention by Vice
President Cheney and long hours with a whole bunch of State Department
lawyers during four days of negotiations in July 2007. The deal was
concluded on July 20, 2007, two years and two days after the initial
breakthrough in the same city. On July 23, I had an opportunity to be
briefed separately by American and Indian representatives on the two
negotiating teams, and both appeared satisfied that it was a "good agreement
and a fair and just deal" between the two governments.

Undersecretary Burns briefed the US industry team on July 30. He was visibly
happy and satisfied. Everyone in the room recognized his pivotal role in
making this deal a success. He in turn lauded the role of the USIBC in
pushing the issue of reprocessing rights. On his way out, he stopped by and
shook my hands.

------------------------------

*Dr. Sazawal is a nuclear policy specialist by profession, having worked for
over three decades in the U.S. nuclear industry. He is also the
International Coordinator of the Indo-American Kashmir Forum.*