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N-deal: India to dedicate 2 sites for US reactors
Ashish Kumar Sen writes from Washington

In an acknowledgement of the lead role the U.S. has played in helping end its nuclear isolation, India has promised to dedicate at least two sites for U.S. firms seeking to set up reactors under a civilian nuclear agreement. It has also committed to purchasing reactors from US firms.

A Bush Administration official told senators about this commitment at a Senate Foreign Relations Committee hearing on the nuclear deal on Thursday.

Undersecretary of State for Political Affairs William J. Burns said India had also agreed to adhere to the Convention on Supplementary Compensation for Nuclear Damage. “Adherence to this international liability regime by the Indian government is an important step in ensuring U.S. nuclear firms are competing on a level playing field with other international competitors,” Burns said.

Earlier in the day, Ted Jones of the U.S.-India Business Council revealed more details of these “nuclear islands” in a discussion at George Washington University.

“We know there are talks under way right now that seek a commitment to certain nuclear islands in India for U.S. technology,” Jones said, adding, specific areas would likely be designated for Russia, French and U.S. firms. He said sites in “Gujarat and elsewhere” would be designated for U.S. companies.

U.S. officials say the deal will open up trade and investment opportunities for U.S. firms in the multi-billion dollar Indian nuclear energy sector for the first time in over three decades. Jones contended the U.S. would not get a majority of the deals, but even 30 per cent would guarantee billions of dollars, which would generate between 75,000 and 148,000 U.S. jobs.

Burns told senators the Bush Administration had taken a number of steps to ensure the U.S. nuclear industry will not suffer any competitive disadvantages during the 123

Agreement review process. He said the Indian government has provided the United States with a “strong Letter of Intent, stating its intention to purchase reactors with at least 10,000 Mega Watts worth of new power generation capacity from U.S. firms.”

This commitment appears to have been made even before the U.S. Congress has approved the nuclear deal thus enabling U.S. firms to begin engaging in nuclear commerce with India.

Having already secured an approval from the Nuclear Suppliers Group, India is free to engage in deals with other members of the 45-nation group, but has promised Washington it will wait until congressional approval before it engages in such trade.

Bush Administration officials urged lawmakers to speedily approve the deal so as not to disadvantage U.S. firms. Burns told senators, “Our hope is that Congress will be able to move this in this session.” Some senators appeared inclined to wrap up the deal. The panel's acting chairman, Democratic Sen. Christopher J. Dodd, said: “Approval of this agreement will still be a milestone in U.S.- Indian relations, and approve it, in my view, we must. We would be well advised to approve it this month, moreover, rather than waiting until next year.” He later told reporters: “We're going to use every minute of every day we have left to see if we can get a deal.”

As per U.S. law, the deal must lie in Congress for 30 days before it can be taken up for a vote. However, with lawmakers scheduled to conclude their session on Sept. 26 there is not enough time to meet this requirement.

Lawmakers can consider legislative options to bypass the 30-day rule, however, this could leave the deal vulnerable to amendments, which India may dislike. Republican Sen. Richard Lugar, co-chairman of the Senate panel, noted: “Given the need to waive most of the 30-day consultation period, a simple, privileged resolution is unavailable to us. Amendments will be in order, and there is no guarantee of a vote on final passage.” A “privileged resolution” would be immune to further amendments.

The question of fuel-supply assurances loomed large over the hearing. President George W. Bush had said in a statement to Congress last week that these assurances were "political commitments" and not legally binding.

Noting the uproar in India over this statement, Burns said the U.S. would do "everything we can" to "ensure steady supply, except in extreme circumstances." In these circumstances - a nuclear test by India or an abrogation of a safeguards agreement - the U.S. administration's actions will be bound by U.S. law.

Noting the 123 Agreement is an enabling legislation, Burns said: "It does not compel American firms... to sell a given product to India.”

And so in some of the scenarios that were mentioned... such as a nuclear test, for example, the 123 Agreement preserves our right as required under the Atomic Energy Act for the United States to terminate cooperation and to seek the return of materials if we judge that to be the appropriate course of action at that time."

Burns said if the U.S. cut off nuclear fuel supply to India and then moved to terminate the 123 Agreement it would not encourage other countries to provide this fuel. "It would not be consistent with that spirit for us to encourage other countries to supply nuclear fuel if the United States did not," he said.

Testifying alongside Burns, Acting Under Secretary of State for Arms Control and International Security, James Rood, said, "Just as India has maintained its sovereign right to conduct a test, so too have we maintained our right to take action in response... In the 123 Agreement, for example, either party has the right to terminate the agreement and seek the return of any transferred materials and technology if it determines that circumstances demand such action."

Rood assured lawmakers that "no side deals were made by the United States to achieve consensus at the Nuclear Suppliers Group” in Vienna.

Congressman Howard Berman, the Democratic chairman of the House Foreign Affairs Committee, had raised this concern after the NSG approval. "We achieved consensus because there was a strong desire among participating governments to find a way to enable civil nuclear trade with India while reinforcing the global nonproliferation regime," Rood said. He added the text of the statement adopted by the NSG is fully consistent with the Hyde Act.

Some Senators, including Democrats Barbara Boxer, John Kerry and Russ Feingold were still not convinced the deal was a good one. Feingold said he was concerned the deal "seriously undermines nonproliferation efforts and could contribute to an arms race that would have global implications."



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