India's nuclear deal with US could blow up

By Peter Foster
Last Updated: 12:01am BST 22/08/2007
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India has enjoyed a honeymoon these past five years, feted at the Davos World Economic Forum, invited to attend G8 Summits and touted in the finance markets as the "new China".
And so, last month, when India and the US put the finishing touches to a controversial deal to supply the country with civilian nuclear fuel and technologies, there seemed even greater reason to cheer.

It was, as India's ambassador to Washington, Ronen Sen, pointed out, an "absolutely unprecedented" deal that recognised India as a de facto nuclear state even though it had never signed the Nuclear Non-Proliferation Treaty (NPT).

In return for opening its civilian reactors to international inspections, India was to be granted full access to the nuclear fuel and technologies it so badly needs to provide power to its burgeoning population.

Even more remarkable, India was to be granted this atomic bounty without submitting its weapons programme to inspection or signing the NPT.

Critics of the deal accused President Bush of driving a coach and horses through the non-proliferation regime by making an exception for India, even as sabres were rattled at two other non-signatories of the treaty, Iran and North Korea. To the critics, these looked like dangerously double standards.


However, on one thing it seemed everyone could agree - the deal was a breathtaking diplomatic coup for India, a nation which, less than a decade earlier, had been put under economic sanctions by the Clinton White House, following its test of a nuclear device in 1998.


But not everyone in India has seen the deal in such glowing terms; this week, the Communist bloc that props up the Congress-led coalition threatened to pull the plug on the government if the deal was allowed to progress.

The negative reaction to a pact which appeared to so transparently favour India sounds a cautionary note amid all the salivating over India's gleaming tech centres and booming stock markets.


This is the political reality of India, which is forgotten at Davos or the investor conferences in Delhi and Mumbai to discuss the inexorable rise of India as a economic super-power.
Dr Manmohan Singh, India's prime minister and the scholarly architect of the country's economic reforms, is sticking to his guns, arguing that the deal is critical to sustaining the 10 per cent economic growth which India needs to progress.

At stake is more than a nuclear co-operation treaty. For its supporters, the deal, as the Times of India pointed out yesterday, represents "India's rapprochement with the international community", a true expression of India's new, outward-looking engagement with the world after decades of self-imposed isolation.


To see it fail would have consequences far beyond India's need for sustainable energy resources, reflecting disastrously on the entire project of the "new" India.


And yet for India's hard-Left and Hindu-nationalist Right, who have long cherished India's historic foreign policy of "non-alignment", the deal is an abject sell-out to American strategic interests.


The agreement, argue India's Communists, will give the US a perpetual stranglehold over foreign policy, allowing India to be used as a strategic counter-weight to an ever more powerful China.


It is one of the great contradictions of modern India that, even as private society looks towards America - a trend visible in everything from shopping malls, to business practices and reality TV shows - the political elite retains a deep-seated ideological aversion to all things American.


For Dr Singh, whose government is dependent for its majority on the informal co-operation of the Communist bloc, the political furore presents him with an unenviable dilemma.


Does he commence negotiations with the International Atomic Energy Authority at a meeting scheduled for September 17 and risk emasculating his government? Or does he shelve the deal and send a message to the world that the "new" India is not quite what it seemed?


If he chooses to press on regardless, the economic reforms on which most economists agree India's continued progress depends - such as loosening restrictive labour laws, liberalising the financial sector and privatising parts of the bloated public sector - will grind to a halt.


With early elections an ever rising possibility, a turbulent future lies ahead. "I expect elections before the scheduled time, maybe before the end of 2008," says N. Bhaskara Rao, a pollster at the Centre for Media Studies in New Delhi.


"But I don't see any stable or definitive government emerging, no matter when the election takes place - which means the economic reform agenda will not pick up any speed."
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