Saturday, September 6, 2008

Nuclear Suppliers Group approves India deal

A breakthrough comes in Vienna after three days of tough negotiations

[Updated Sunday 09/07/08 with summaries of coverage from major U.S. newspapers. See below]

The BBC reports the group of nations which regulates the global nuclear trade has approved a US proposal to lift restrictions on selling nuclear technology to India. The controversial deal now needs to be ratified by the US Congress.

The approval came after India pledged to keep its nuclear non-proliferation commitments and to uphold a voluntary moratorium on testing atomic weapons.

It took the 45-nation Nuclear Suppliers Group (NSG) nearly three days of protracted negotiations in Vienna to reach agreement. Austria, New Zealand, and Ireland, were the last three countries holding out on approval due to strong reservations about granting a waiver to India because it has not signed the Nuclear Proliferation Treaty. The breakthrough reportedly came after US President George W Bush lobbied members of the NSG.

Austria, New Zealand and Ireland lifted their objection to the US proposal after India made a formal pledge to not share sensitive nuclear technology or material and to uphold its moratorium on testing nuclear weapons. The technologies in question include uranium enrichment and spent nuclear fuel reprocessing.

US and Indian officials hailed the agreement as one that would help limit the unregulated spread of nuclear technology and material while allowing India to meet its energy demands with a "clean and reliable" supply. Under the terms of the deal, India would open 14 civilian nuclear facilities to inspection, but its nuclear weapons sites would remain off-limits.

Indian Prime Minister Manmohan Singh said the NSG decision "marks the end of India's decades-long isolation from the nuclear mainstream and of the technology denial regime".

"This is a critically important moment for meeting the energy needs in India, and indeed dealing with the global need for clean and reliable energy supplies," said John Rood, acting US undersecretary of state for arms control.

Critics weigh in

Critics of the deal say it creates a dangerous precedent. They claim it will allow India to expand its nuclear power industry without requiring it to sign the Non-Proliferation Treaty. They also say the deal would undermine the arguments for isolating Iran over its nuclear program and be a disaster for international non-proliferation efforts.

Supporters and critics of the deal will find there is a lot of useful information, including the NSG's final text, at the Arms Control Association website. At the blog Arms Control Wonk, analyst Jeffrey Lewis asks what the U.S. had to give up to gain China's cooperation and support for the deal?

The current deal is the center piece of US efforts to bolster ties with India. Bush administration must now push it through Congress before legislators break for the November elections.

Full extent of the waiver noted

Siddharth Varadarajan, Deputy Editor of the Hindu, reports direct from Vienna,

The waiver allows India to enter into full civil nuclear cooperation with members of the NSG. A major new change is a reference to the External Affairs minister's statement yesterday reiterating India's nonproliferation commitments, including to its unilateral, voluntary moratorium.

There are no post-conditions providing for automatic termination of supply if some member state feels India is not living up to its non-proliferation commitments. The NSG always has the right to consult and convene in case members feel this has happened but a decision to cut off supplies will have to be adopted by consensus. There are no separate restrictions on enrichment and reprocessing technology exports.

More updates from Siddarth here.

Congressional approval is the next challenge

Bloomberg wire service has additional details. It reported that India has won the right to buy nuclear fuel, technologies, and equipment after the NSG lifted a three-decade ban on exports to the country.

"This constitutes a major landmark in our quest for energy security," Indian Foreign Minister Pranab Mukherjee said in televised comments. "This decision will open a new chapter in India's cooperation with other countries in the peaceful use of nuclear energy."

"It's really a very big step forward for the nonproliferation framework," U.S. Secretary of State Condoleezza Rice told reporters during a trip to Tunisia and Algeria. Rice said she spoke to Chinese officials this morning as well as negotiators from Ireland and Austria, the last holdout at the three-day meeting in Vienna.

The waiver means that companies including France's Areva, Russia's Rosatom, and Japan's Toshiba (Westinghouse) will be able to export nuclear equipment to India. General Electric Co. and other companies in the U.S. will have to wait until Congress ratifies the NSG deal.

Bloomberg reported that General Electric, the world's biggest maker of energy- generation equipment, said Aug. 25 that it may lose contracts in India to French, Russian and Japanese rivals if Congress doesn't ratify a U.S.-India nuclear deal soon after the agreement wins approval from the Suppliers Group. Rice said the U.S. has talked to India about the potential competitive disadvantage. According to Bloomberg she said,

"I think they recognize and appreciate American leadership on this issue. Because of that I think we'll have ways to talk them about not disadvantaging American companies."

Congress, starts its next session on Sept. 8, but it may not be able to approve the U.S.-India nuclear cooperation agreement. House Foreign Affiars Committee Chairman Howard Berman, (D-Calif), who opposes the deal, reportedly told Rice he will work to block it. Approval may have to wait until a new Congress, shaped by the November election, meets in 2009.

Economic impact will include private sector investment

The Economic Times of India reports reaction from India's business community. India's top corporations feel that the country can now attract over $40 billion in foreign investment over the next 10-15 years as the result of private sector entry into India's nuclear power generation.

"The go-ahead to the nuclear deal will signal the building of scores of nuclear plants in India on assured fuel supply," said Amit Mitra, the secretary general of the Federation of Indian Chambers of Commerce and Industry.

Today's development is a major confidence-building move for the international community to engage with India especially in high technology trade," said Chandrajit Banerjee, director general of the Confederation of Indian Industry.

"It will provide opportunity for Indian manufacturers to supply spares and components to the global manufacturers of nuclear power plants besides providing business opportunities for Indian power plant construction companies."

An overwhelming 85 percent of the 300 chief executives polled held the view that modifications to India's Atomic Energy Act of 1962 could help the country to generate some 20,000 MWe by 2020.

The modification is necessary to allow entry of the private sector in nuclear power generation. The act and the decades of India's nuclear isolation had resulted in capping the country's nuclear power generation capacities to an extent of just 3,900 MWe in over 60 years of independence.

As a result, out of a total installed generation capacity of about 145,000 MW of electricity, 70 is accounted for through thermal fuel and 20 percent by hydro, with nuclear energy contributing to just two percent. The remaining capacities come by tapping the various sources of non-conventional energy such as solar, wind, biomass and tidal waves.

U.S. Defense industries may also benefit

At WhirledView, Cheryl Rofer has these observations about the nuclear deal

The Indian government has proved extremely skillful in negotiating throughout this long saga. Although one of the objectives has been touted as bringing India into the nonproliferation regime, every attempt in that direction has been blunted by that Indian skill. We can hope that a new American administration and Congress would now use the agreement in that direction. Congress must still grant its approval, and it is not clear whether that can happen during the current session.

If the waiver opens nuclear trade to all nations and Congress does not approve, the United States will be left out of the great Indian nuclear rush. However, because the US-India deal also includes conventional military assistance, we can count on the defense lobby to help India (and itself) out.

Late breaking news media coverage in the U.S.

NYT - The New York Times, in late coverage available Saturday on the newspaper's web site, also provided an estimate of the economic benefits of the nuclear deal with India.

India plans to import at least eight 1,000 megawatt nuclear reactors by 2012, according to the US State Department. Even if the United States wins bids for just two of these reactors, the deals would create 3,000 to 5,000 direct jobs and 10,000 to 15,000 indirect jobs in the United States, the State Department has said.

The New York Times follows up on Sunday with a second story. In addition to details about the deal itself, the Times offers readers a review of the congressional landscape and the prospects for approval. The Times, like everyone else, reads the calendar and asks whether there is enough time for Congress to act. More ominously, for supporters, the Times singles out the Democrats in the House as the primary barrier to approval.

Representative Howard L. Berman, a California Democrat who is chairman of the House Foreign Affairs Committee, said in an interview on Saturday that he would not consider any expedited timetable for considering the agreement until the Bush administration provides him with more information about the negotiations in Vienna.

A potentially more significant hurdle for the White House is that a Democratic Congress might not want to give President Bush a significant victory during his waning days in office. White House officials have long hoped that the deal could be part of Mr. Bush’s foreign policy legacy.

There is some measure of political reality in the larger picture. The Times points out that a lot is riding on the deal, and the House did previously indicate its support for India's nuclear deal even if the majority was with the republicans at the time.

Representative Ellen O. Tauscher, a California Democrat, said by telephone [to the NYT] on Saturday that the nuclear agreement was a “very, very bad deal,” but said that since the 2006 vote indicated that a large part of the House of Representatives was inclined to approve the pact and that it would be difficult to scuttle the deal at this point.


WSJ - The Wall Street Journal was alone among the U.S. mainstream media to have complete coverage of the negotiations and response to the completion of the deal. In coverage published on the newspaper's website on Saturday 9/6 the WSJ reported that the Bush Administration is worried there won't be enough time for Congress to approve the deal.

U.S. lawmakers have indicated that Congress might not have enough time to fully vet and pass the India nuclear agreement before the current legislative session ends this month. This holds out the possibility that the nuclear accord could be passed on to a new U.S. administration and Congress next year.

WaPo - The Washington Post finally weighs in on Sunday with coverage of the NSG's historic meeting that approved India's nuclear deal. The Post focuses on the political significance and economic value of the deal. Also, there is a great photo slide show on the Post's web site of the principals involved in the negotiations.

Supporters called the deal a foreign policy triumph that would position India as a strategic counter to China's rising power. The deal will open the door for American companies to build reactors in and supply fuel to India, generating business worth more than $100 billion.

The Post's coverage confirms what was reported on this blog late last Friday, and that is that 'Elvis,' aka, China, left the building in Vienna where the meeting was being held to send a signal of disapproval without having to cast a "no" vote.
The Washington Post's coverage is also notable for citing some of the news media cover taking place in India.

Finally, it is worth noting, like the old adage about Operas and fat ladies singing, that critics of the deal feel there is still debate about it to be had in the future. Congress will surely be the center of these debates in the next few weeks. Advocates and critics will try to get the short attention span of both the House and Senate who are trying to get out of Washington by the end of the month for the November elections.

The lead critic in the U.S., Daryl G. Kimball, who has aligned himself with Rep Howard Berman (D-Calif), the chairman of the House Foreign Affairs Committee, told the Washington Post it ain't over until the fat lady sings. She'll come on stage this week. Here's the pull quote from the newspaper's coverage.

"We were hoping for far clearer and unambiguous language on nuclear testing. Instead, it is mushy. That is a grave mistake, and there are going to be far-reaching consequences," Daryl G. Kimball, executive director of the Arms Control Association, said in a telephone interview from Washington. "Because the negotiations were tough and the real differences not fully resolved, there will likely be serious differences . . . about the interpretations of what the guidelines allow and don't allow and what the consequences of any violation of India's nonproliferation and disarmament commitments would be."

Finally, the Post lists links to its prior recent coverage of India's nuclear deal. It will save time for those of you who might have missed coverage by the newspaper of Rep. Berman's hardball pitch with a "secret letter" from the State Department that nearly sank the entire process. Really.

* * *

Separately, Secretary of State
Condoleezza Rice picked up a a hockey stick and with a wicked slap shot said that a similar nuclear cooperation pact Washington was pursing with Russia would not pass during President Bush's second term. Rice said the White House would formally announce it is pulling out of support for the deal, given Moscow's military occupation of Georgia. "The time isn't right for the Russia deal," Rice said.

& & &

  • A complete chronology of India's nuclear history and the run up to the NSG decision is available from the Times of India.
  • For details on the run up since Friday to the agreement see prior coverage on this blog.
# # #

Friday, September 5, 2008

India nuclear deal down to the wire

Saturday September 6th

1400 GMT
Nuclear Suppliers Group approves India's nuclear deal.

(0100 GMT) Reuters reports the U.S. push to lift a global ban on nuclear trade with India stalled on Saturday when a revised proposal failed to win over nations because it did not bind India to refrain from more nuclear bomb tests, diplomats said.

Reuters reported feverish U.S. efforts to clinch consensus at a two-day NSG meeting on the waiver dragged proceedings well into Friday night, but finally stumbled on the testing issue, forcing adjournment in Saturday's early hours. "No decision is possible at this time. The meeting is to resume at 11 a.m. (0900 GMT) Saturday," one diplomat said.

The diplomat said the meeting broke down when China's delegation left the meeting in part to support Ireland, Austria and New Zealand. "The Americans have bullied them, including with high-level phone calls to their capitals, but they held firm because the U.S. has showed no flexibility on testing," a diplomat at the meeting told Reuters. President Bush reportedly made the calls to his counterparts in all four countries.

(0030 GMT)The Hindustan Times reports that India’s case for a waiver at the Nuclear Suppliers Group was discussed intensely late on Friday night with the 45-nation cartel that controls global nuclear commerce unable to reach a decision.

Non-proliferation policy issues ensured that a decision by the NSG went down to the wire. Austria led the opposition at the meeting refusing to accept American proposals, saying that it could not change its policy on non-proliferation so close to its parliamentary election.

The Times of India reports that Austria and Ireland are the "last men standing" in the way of a nuclear deal with the U.S. Austria and Ireland rejected as “inadequate” India’s statement that it “remained committed to a voluntary, unilateral moratorium on nuclear testing.”

According to the newspaper, Austrian officials have told the Americans that with elections around the corner, they could not afford to alienate the Green Party. Irish officials said they stood "on principle" regarding support for the nuclear nonproliferation treaty.

NDTV in New Dehli reports that US President George Bush has called Chinese President Hu Jintao to seek China's support. However,the move apparently backfired as the Chinese delegation subsequently left the NSG meeting reportedly recalled by their government. Reports from Vienna suggest the Chinese are saying the NSG process must not be rushed to make a decision right away and that's the reason the delegation was recalled to Beijing. The action takes China out of the room without having to cast a "no" vote. It has the effect of a veto anyway since further delay by the NSG will put it out of position relative to action by the U.S. Congress.

Siddharth Varadarajan reports from Vienna via The Hindu that "desperate three-way negotiations were under way" late Friday night between American, Indian and G-6 country officials over the wording and structure of the U.S. proposal to allow nuclear commerce with India.

The Hindu reports, according to a diplomatic source, that the U.S. is conducting parallel consultations in small groups to hammer out an agreement and “the whole thing now has to be integrated in some way” according to an unnamed U.S. official. Among the countries pressing for tougher language were Ireland, Austria, and New Zealand. However, China's delegation has reportedly left the NSG meeting.

At press time, a diplomat from the Group of Six ‘like minded nations’ holding out for tougher conditions told The Hindu that “the meetings are still on and we’re not likely to have final agreement tonight [Friday] given the need for some delegations to get instructions [from their governments] on the revised text.”

A number of states continuing to insist on a clear “cause and effect” link between a future Indian atomic test and the termination of nuclear supplies.

Friday September 5th

type keys(2230 GMT) The Business Standard of India reports a meeting of the 45-member Nuclear Suppliers’ Group (NSG) to approve the India-US nuclear deal went on late into the night in Vienna, but consensus has apparently escaped the grasp of the group mostly because of the continued opposition of Austria, Ireland and New Zealand.

A third round of meetings looms on the horizon, possibly taking place in late September India's External Affairs Minister Pranab Mukherjee told the Business Standard in New Dheli. He expressed concern about another draft of the document that was circulated in Vienna, listing the terms and conditions that India would be required sign on for to seal the deal. A third meeting will miss the window of opportunity to gain legislative approval from the U.S. Congress. (see text box below)

The changes to the draft were minimal, and some critics said "cosmetic," but Austria insisted that some of their objections be captured in the draft agreement. So far their objections to the current draft have not been met despite intensive dialog during both both days of the meeting. The Business Standard published this comparison of possible outcomes of the NSG meeting. (Text box by Business Standard, India, Sept 5)

(2100 GMT) China threw a monkey wrench into the deliberations of the Nuclear Suppliers Group by recalling its delegation to the meeting. Reuters reports China caused an additional complication in the complex negotiations when its delegation announced it needed to return to Beijing.

Meanwhile, Norway and the Netherlands are reported to have agreed to new language involving a voluntary declaration crafted during the day in behind the scenes discussions. Only Ireland, Austria, and New Zealand were sticking to a tough line on testing. A diplomat at the meeting told Reuters said the general consensus among U.S. and other diplomats was that "the three will come on board at some point."

The diplomat said Washington wanted "to keep pushing along, using the clock as an ally to turn the three hold-outs, so the Chinese comment is problematic." Nobody was willing to put an interpretation on the unexpected move by China. The 45-nation body is working deep into the night to craft a declaration that can gain unanimous support from its members.

Critics of the proposed deal fear India could use access to nuclear material markets to boost its bomb program and drive nuclear rival Pakistan into another arms race. Neither India nor Pakistan have signed the Nuclear Nonproliferation Treaty. Opposition to the deal anchors on this issue.

"Voluntary declarations do not have the same value as a (binding) NSG text," another diplomat told Reuters.

(1700 GMT) The Times of India reports Austria, one of the six-pack, is reportedly still unhappy with the current form of nuclear draft and is seeking more changes in it. The United States has put pressure on Austria to agree to the deal, sources told the newspaper.

Diplomatic sources say New Zealand and Austria are the last hurdles in India’s quest to get a waiver from the NSG. An extended break is in place before the last session of talks to convince the opponents to change their minds. The Times quoted an Austrian diplomat who explained what his nation wants from the NSG.

"We want to have more effective and qualitatively improved security architecture," said Peter Launsky, an Austrian foreign ministry official.

Switzerland, which was one of the original members of the "six-pack," now reportedly has agreed not oppose the India-specific exemption. Japan and China are said to be in favor of a consensus on the India-US nuclear deal. This is a major development because up to now China was supporting the six-pack's opposition to it.

At 1700 GMT it is now early evening in Vienna. If the NSG cannot break the stalemate, it is unlikely the group will schedule a third meeting. Time is running out for action by the U.S. Congress to also ratify the deal.

(1600 GMT) The Hindustan Times reports live from Vienna that in a last ditch effort to win over skeptics in the Nuclear Suppliers' Group (NSG), India Friday said its deal with the US would strengthen the global non-proliferation regime and reiterated its commitment to voluntary moratorium on nuclear testing. New Delhi also sought to allay fears of a nuclear arms race and underlined that India had "always tempered the exercise of our strategic autonomy with a sense of global responsibility".

Indian Foreign Minister Pranab Mukherjee's statement re-affirming New Delhi's commitment to a "voluntary moratorium" on future testing was praised as "very significant" by the Nuclear Suppliers' Group and seemed to have generated a "positive momentum" among its 45 members meeting to decide on an unprecedented waiver for India.

"This is a very significant statement which was discussed by members of the NSG and praised and welcomed by those in attendance," US Assistant Secretary for Arms Control and International Security Affairs John Rood told reporters at the end of the of Friday's morning session of the NSG.

(1500 GMT) IBN India wire service reports Ireland and Austria are the two countries at the 45-nation Nuclear Suppliers Group that stand between India and the ending of its 30-year-old nuclear isolation. In an indication that India's case for a waiver for nuclear commerce is going down to the wire, the NSG broke for informal discussions after two rounds of formal parleys.

The one-hour break is expected to be used by those having "strongest opinions"--those strongly pushing for the India waiver like Russia, Britain and France and those who have reservations like Ireland, New Zealand, Austria and Switzerland to discuss and attempt to thrash out differences, PTI quoted an unnamed Western diplomat as saying.

(1400 GMT) Reuters reports that delegates to the meeting of the Nuclear Suppliers Group (NSG) taking place in Vienna, Austria, today (9/5) said India's pledges to honor the nuclear nonproliferation treaty do not go far enough.

Member countries are worried that India could set off a regional nuclear arms race if it acquires uranium enrichment and spent fuel reprocessing technologies. Also, some countries have said that if India is allowed to buy uranium on the world market for its civilian reactors that this will allow it to divert domestic supplies to its nuclear arms program.

Six counties now backed by China are holding firm to a requirement that would cut off supplies of uranium and access to nuclear technologies if it conducts another nuclear weapon test.

(1200 GMT) The Associated Press reported that India pledged Friday not to engage in a new arms race as talks continued in Vienna over whether to let the United States sell India nuclear material and technology for civilian use.

In New Delhi, External Affairs Minister Pranab Mukherjee said his country remains committed to a voluntary moratorium on nuclear testing. He said India would not touch off a new arms race or share sensitive nuclear technology with others.

"We do not subscribe to any arms race, including a nuclear arms race," Mukherjee said Friday. "We have always tempered the exercise of our strategic autonomy with a sense of global responsibility. We affirm our policy of no-first-use of nuclear weapons."

Acting U.S. Undersecretary of State John Rood, who specializes in arms control issues, told reporters in Vienna as the talks broke for lunch that Washington remained "confident and optimistic" that it would hammer out a compromise.

(0900 GMT) The Hindu newspaper reports that things do not look good for an agreement on Friday. Here's the lead from the latest dispatch posted early Friday morning Sept 5.

The Group of Six like-minded states are continuing to insist on a clear "cause and effect" link between a future Indian atomic test and the termination of nuclear supplies and will block approval of the United States proposal to allow commerce with India when the Nuclear Suppliers Group reconvenes here Friday.


Prior coverage on this blog

# # #

Wednesday, September 3, 2008

India nuclear deal hits the rocks

Rep, Howard Berman releases a secret letter to Congress

[Multiple updates 09/04/08, 09/05/08 below]
09/05/08 Latest news reports links here
09/06/08 the NSG approved India.s nuclear deal

shipwreck

Check Siddharth Varadarajan's blog for late breaking developments and reports direct from Vienna.

The Washington Post reports that the U.S. will not sell sensitive nuclear technologies to India and would immediately terminate all trade involving nuclear technologies if New Delhi conducted a nuclear test. Apparently, the State Department told this to Congress in correspondence that has remained secret since last winter.

The Indian government will undoubtedly see the letter as a significant setback to bilateral relations with the U.S. Also, it virtually compels the Indian government to seek nuclear technologies from French and Russian suppliers. In blunt words it it is a shipwreck for the India nuclear deal and for the aspirations of U.S. firms that want to sell nuclear technologies to that country.

The newspaper reported that the correspondence was made public by Rep. Howard L. Berman (D-Calif.), chairman of the House Foreign Affairs Committee, just before the 45-nation Nuclear Suppliers Group meets again in Vienna. The group's will hold a second round of meetings to consider releasing India from restrictions on nuclear trade as part of a U.S.-India civil nuclear deal that has been in the works for at least two years.

Berman opposes the India nuclear deal. The action appears to be directed at influencing the meeting of the Nuclear Suppliers Group which convenes later this week in Vienna to consider a second draft of the India nuclear deal. Berman's action was praised by Daryl Kimball, executive director of the Arms Control Association, which opposes the U.S.-India agreement. Kimball told the newspaper he supports the conditions laid out in the State Department correspondence and advocates that the NSG adopt them.

Basically, the letter says the U.S. would cut off all supplies of nuclear fuel to India if it ever conducts another nuclear test. It also says the U.S. would get other NSG states to cut off nuclear fuel supplies as well. It asserts the U.S. has no plans to transfer so-called "dual use" technologies that would support uranium enrichment or spent fuel reprocessing, and the U.S. reserves the right to override an IAEA determination about the effectiveness of safeguards on nuclear technologies sold to India. These terms and conditions for the nuclear deal are not what India expected to get from it.

In terms of the outcome of the NSG meeting, none of them look good. If the NSG is unable to come to terms with India and the U.S. at its meeting in Vienna, it is unlikely either nation has the patience or stomach for a third round especially with the contents of the Berman letter being made public. Even if the NSG approves the current draft as submitted by the U.S., which is unlikely, India has no incentive to buy anything from American firms. Finally, even if India gets what it wants, or at least some of what it wants, which is more likely, India would still not buy nuclear fuel and technologies from the U.S. because of the threat of a cutoff in the future.

It's bad medicine as we say here in the West, and there is big trouble ahead for the next U.S. administration in its dealings with India nuclear deal or not.

Updates 09/04/08

Bloomberg wire service has an update reporting the NSG is unlikely to grant India a waiver to buy nuclear fuel. The Arms Control Association has a copy of the U.S. proposal. The Bloomberg wire service report online has a link to the 26-page letter from the State Dept. that Rep. Berman released to the press on Sept 3.

The Washington Post has an update from New Dehli on reactions to the State Department letter. It's bad news for Singh and his government. The New York Times reports that opposition parties are calling for Singh's resignation saying that he misled them about the nature and content of his negotiations with the Bush Administration.

Mr. Singh told lawmakers last year that “the agreement does not in any way affect India’s right to undertake future nuclear tests, if it is necessary.” In fact the State Department letter says the U.S. would impose harsh measures if India conducted another nuclear test.

The Hindu has coverage from the NSG meeting in Vienna. Some progress is reported in the negotiations, but there are still serious issues that need to be resolved and only one more day to do so. According to the newspaper, " . . .the proposal was really about what kind of relationship they wished to have with India,” a European diplomat told The Hindu.

Updates 09/05/08

Overall, the Hindu newspaper reports that things do not look good for an agreement on Friday. Here's the lead from the latest dispatch posted early Friday morning Sept 5.

The Group of Six like-minded states are continuing to insist on a clear "cause and effect" link between a future Indian atomic test and the termination of nuclear supplies and will block approval of the United States proposal to allow commerce with India when the Nuclear Suppliers Group reconvenes here Friday.

Prior coverage on this blog

# # #

Monday, September 1, 2008

India deal may be done in by a six pack

Nuclear Suppliers Group likely to say "no" to U.S. plan to sell uranium to India

six packThe U.S. nuclear deal with India is likely to fail to gain approval this week by an international body that controls the sale of uranium, nuclear fuel, and related technologies. Six small but influential nations are standing firm in their opposition within the Nuclear Suppliers Group (NSG).

Reuters reports that a revised U.S. proposal to lift the global ban on nuclear trade with India does not go far enough to overcome fears that India will use the ability to acquire uranium for its civilian reactors to bolster its military nuclear arsenal and set off new a regional arms race.

The six nations, backed by 15 more, have rejected the latest text of a U.S. draft plan to waive the NSG rules for dealing with a nation like India which has not signed the Nuclear Nonproliferation Treaty. The 45-nation NSG requires unanimous approval to change the rules. Initial U.S. efforts to gain acceptance failed on Aug 24. The six nations that are leading efforts to sink the deal are New Zealand, Ireland, Austria, Norway, the Netherlands, and Switzerland.

Sing_bush1Without early action by the NSG the U.S. Congress may run out of time to ratify the U.S. nuclear deal with India. Congress is in a race to adjourn because of the November elections. If Congress does not act on the deal, it will likely be some time before a new U.S. administration picks up the pieces.

Opponents argue nonproliferation is the primary value

Opponents of the deal argue that the new text is no improvement over the old one. Daryl Kimball of the Arms Control Association, wrote on the organization's web site, "The proposal makes no substantive concessions and is essentially the same as the earlier one." He condemned Bush Administration efforts to push the nuclear deal through the NSG calling it "irresponsible."

The New York Times wrote in an editorial on Aug 31 that the failure of the agreement before the NSG is entirely predictable.

Mr. Bush and his team were so eager for a foreign policy success that they gave away the store. They extracted no promise from India to stop producing bomb-making material. No promise not to expand its arsenal. And no promise not to resume nuclear testing.

China weighs in with criticism

While six small nations are leading the charge against the deal, China's top newspaper today (Sept 1) called the proposed nuclear agreement a "blow to nonproliferation." Reuters reports that the comment is a rare public response from Beijing. The commentary is by Fan Jishe of the Chinese Academy of Social Sciences. Fan Jishe is also a former fellow of Harvard's Belfer Center Project on Managing the Atom. ~ Hat tip to Siddharth Varadarajan, deputy editor of the Hindu ~

"Whether it is motivated by geopolitical considerations or commercial interests, the U.S.-India nuclear agreement has constituted a major blow to the international non-proliferation regime," said the commentary by a researcher from the Chinese Academy of Social Sciences, a leading state think tank.

"Irrespective of the fate of the U.S.-India nuclear agreement, the United States' multiple standards on non-proliferation issues have met with a skeptical world."

India's red lines will not be crossed

World Nuclear News reported Aug 26 that India's leaders have said they want no additional restrictions placed on them since they've already signed up for IAEA safeguards. Bloomberg wire service reported even more emphatic opposition to changes to the deal from the head of India's nuclear program.

India expects unconditional exemption from the 45-nation Nuclear Suppliers Group to buy fuel and technology for its energy plan according to Anil Kakodkar, chairman of the country's Atomic Energy Commission.

"The NSG exemption should be clean and there should be no additional condition," Kakodkar told reporters in Mumbai. "They may want to push, but India can't be pushed. Civil nuclear cooperation is important, but that doesn't mean at any cost."

In India National Security Advisor, M K Narayanan told the Hindu newspaper that there are "red lines" that the country will not cross. If new conditions are imposed on the country by the NSG as a condition of buying uranium, then all bets are off. The statement came in an exclusive interview with Karan Thapar at The Hindu.

According to the Narayanan, India won't accept in the revised Nuclear Suppliers Group draft waiver:

  • an explicit reference to a nuclear test by India triggering adverse consequences
  • a provision for periodic review
  • a separate ban on enrichment and reprocessing equipment sales to India by the NSG

He also says India would have no great issue with the NSG chair making a statement outlining the issues and concerns some states may have on the waiver and on India in general, since this would not impinge on the decision. It is unlikely that will happen as opposition within the NSG is too strong to be deterred by a diplomatic fig leaf.

India has other options besides the U.S. deal

World Nuclear News also pointed out the amendment of NSG guidelines would trigger a rush of cooperation agreements with leading nuclear energy states to be followed by commercial contracts in nuclear power with Indian firms entering the global market as both buyers and sellers.

"This would help India rapidly advance its existing self sufficient nuclear science, skills and technology base as well as to gain access to much more secure supplies of uranium for its power reactor fleet."

India is likely to seek these benefits for its civilian nuclear fleet whether it gets the NSG deal or not. In the U.S. Paul Nelson, a fellow of the American Nuclear Society and Professor Emeritus at Texas A&M University, wrote in an online commentary the six states leading the opposition are not well qualified to sit in judgment of India's need to pursue its stated policy of "maintaining a minimum credible nuclear deterrence." Further, he said, they don't have India's need for nuclear energy to power the civilian economy. In an email to me Nelson wrote,

If agreement doesn't go through, then one of two things will happen, both of which are worse for disarmament/proliferation than the "deal" would be:

Russia, probably followed by France, will ignore the voluntary NSG, and cut civil nuclear deals with India, such as the plants the Russians are on the verge of completing at Kudankulam, in far south India. In this case Indian development of civil nuclear energy will proceed, but without any proliferation-ameliorating influence from the US.

No such deal will be cut, in which case India's civil program will be deep-sixed, and it will have no use for its indigenous nuclear capability except for weapons applications.

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The problem for just about everyone is that the NSG was created in response to India's 1974 test of an atomic weapon made possible by the provision of nuclear technologies that had been provided for peaceful purposes. Since then the NSG has insisted in a clear divide between civilian and military uses of nuclear energy. It seems unlikely that this principle will be overturned by the current efforts of the Bush administration.

Prior coverage on this blog

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Sunday, August 31, 2008

TVA's destiny revealed at Bellefonte - Part II

It enters uncharted territory by asking NRC for reinstatement of the licenses for two unfinished nuclear reactors [Update 09/13/08]

Bellefonte 1 & 2The Tennessee Valley Authority (TVA) has asked the Nuclear Regulatory Commission (NRC) to reinstate the licenses for two partially completed reactors at its Bellefonte site near Scottsboro, GA. The Knoxville News reports the first-of-a-kind request could result in the restart of construction at the two partially completed nuclear reactors.

In 1974 the NRC granted construction permits for two B&W 1,263 MWe PWRs, but by 1988 due to increasing costs TVA stopped work with Bellefonte 1 at 88% completion and Bellefonte 2 at 54% completion. TVA now says that the units are needed to meet increasing base load demand. TVA already has licensing efforts underway on the new Bellefonte 3 & 4 reactors which are designated as Westinghouse AP1000s.

According to the Birmingham News for Aug 2, Jack Bailey, TVA's vice president of nuclear generation, said at a forum in Scottsboro earlier this year that Units 3 and 4 could cost up to $9 billion or about $4.5 billion each. At 1,200 MWe that works out to about $3,800/Kw as a ball park figure. This number is significant as described below.

The rising costs of construction materials and the need to meet new base load demand are the key factors driving TVA's exploration of completing the two mothballed units. What's not clear is whether TVA plans to consider completing Bellefonte units 1 & 2 in lieu of units 3 & 4, building all four units, or some other option. TVA said it has not yet made a decision on whether to actually finish the two units or any other option.

Ashok Bhatnagar, TVA Senior Vice President of Nuclear Development, said, "Reinstating the construction permits will help TVA understand the regulatory requirements and to evaluate the feasibility of using Units 1 & 2 to meet future base load power demand." His 2007 presentation on TVA's nuclear future is a 'must read' to get insights into the agency's plans and direction.

Permit conundrums confound the regulators

nrc logoTVA's actions came as a big surprise to the NRC. Agency spokesman Ken Clark told the Knoxville News the request to reinstate the permits is "unprecedented."

"In my recollection nobody has filed to reinstate a construction permit. The NRC staff will have to make a decision whether or not the process will have to start all over again."

Clark said the agency isn't rattled by the request, but it has to sort things out. He said the NRC has a process for reviving permits and also has some discretion in these matters as well as a precedent from a Texas case.

Joey Ledford, an NRC official in Atlanta, told the Knoxville newspaper he was unsure how long it would take for the agency to make up its mind on which way to proceed. The reason, he said, is that no one at the agency can recall getting a request like this one.

Other issues include elements of the new permit application for units 3 & 4 such as cooling towers, water intake, as well as the transmission and distribution infrastructure. "We assumed units 1 & 2 had been canceled," Clark said. He also noted that when the NRC considered the environmental impacts of units 3 & 4, they assumed units 1 & 2 would not be running. The answers to these issues will also drive costs and ultimately TVA's decision whether to proceed with the old units, the new ones, or both.

Back of the envelope earned value calculation

The Tennessean reported on Aug 28 that Tom Kilgore, TVA CEO, and Bill McCollum, TVA COO, told the TVA board of directors they don't have a cost figure at this time on what it would take to complete the two reactors or how the agency might share costs with investment partners.

McCollum added that the types of reactors being considered could come in at $5 billion each if built new. Kilgore reportedly told the TVA board there is great value in the work done so far on the two reactors especially when you consider what it would cost to put in concrete and steel for them at today's prices.

calculatorThe agency said it has budgeted $10 million over the next 18 months to evaluate the potential for completing the two older units. A quick back-of-the-envelope estimate suggests that the cost to complete the two units could be $3.6 billion at a minimum. Here's how that figure breaks down.

Assume for the sake of discussion that the two older units can pass the regulatory hurdles and that construction can be restarted. If one also assumes a construction cost of $3,500/Kw, and credits the past work at this price, the cost of the additional work looks like this (table below by the author).

The assumptions are that the same power ratings are expected at completion as were specified in the original design. If you think the price/Kw should be higher just create a spreadsheet like this one and plug in your own number.

Bellefonte table

These numbers illustrate a way to think about the costs and are not an engineering estimate. The numbers in the table do not include contingencies for unknown technical risks, which could be as much as 15% of the total project cost ($8.4B) or about another $1.3 billion for both units. This would bring the total cost of completing both units to $3.6 billion. This number is important to put things in perspective because critics of the plan have some wild estimates that far exceed it.

Critics cite debt as a reason not to proceed

While TVA's management was mulling over whether to revive the first two units, several critics of the agency voiced concerns about costs and TVA's current debt load. Gary Morgan, of Concerned Citizens of Scottsboro, Ala., told the Tennessean on Aug 22 that TVA's debt from other energy projects is already too high. He estimated the cost of completing the two older units at $12-18 billion. Morgan did not provide a basis for his estimate. Morgan's number is three-to-five times greater than the back-of-the-envelope estimate. It seems more like he pulled a very large number out of the air and then waved it around like a red flag. Morgan said he was concerned that if these prices turned out to be the case that TVA "could go insolvent." Morgan said his group wants revival of the licensing process stopped until more information is available on costs.

bredlStephen Smith, Director of the anti-nuclear Southern Alliance for Clean Energy, told the Chattanooga Times Free Press on Aug 23 that reviving the two old reactors "would be a money pit." He said his group doubted the two units could be finished at a "reasonable cost," but like Morgan he didn't put a number on what he considered to be "reasonable."

Lou Zeller, science director of the Blue Ridge Environmental Defense League, didn't even bother with numbers. He just threw a slider pitch to the press telling the Birmingham News that TVA is making a big mistake by gambling on the future of energy economics. "We think TVA is doubling down on its bet," he said.

In response to these criticisms, Bill McCollum, TVA COO, said, "We intend to thoroughly explore potential power supply sources to determine the best and most cost-effective methods of meeting future power needs. That includes energy efficiency and demand reduction. as well as new generating units as the demand for power grows."

Full speed ahead on licensing efforts for units 3 & 4

Bellefonte 3 & 4 sketch While TVA was exploring uncharted territory with the NRC licenses for units 1 & 2, it continued work with the NuStart consortium to pursue a combined construction and operating license (COL) for two Westinghouse AP1000s for units 3 & 4 which would add approximately 2,300 MWe to the agency's generating capacity if built. The COL was submitted to the NRC in October 2007. A decision is expected in 2011. TVA is also completing Unit 2 of the Watts Bar nuclear reactor at Spring Valley, TN.

TVA's Ashok Bhatnagar told the Knoxville News the agency sees nuclear energy as an increasingly economical option for power generation needs.

"First and foremost we do feel that we need new base load generation capacity about every five-to-seven years. Our thinking is that nuclear is the best product to put out there into the future."

If carbon taxes and carbon tax-cap-and-trade programs are enacted by the next Congress, the price of burning coal, which is a major fuel source for TVA, will sky rocket. The only relief will come from investments in fuel sources that do not emit greenhouse gases such as carbon dioxide. Wind and solar will not meet the demands of TVA's customers for electricity. Nuclear energy has a place at the table at TVA. The key question is how many places the agency will set at Bellefonte.

Update 09/13/08

Forbes reports via the Associated Press that three anti-nuclear groups are trying block plans to restart work on TVA's unfinished Bellefonte Nuclear Plants, Unit 1 & 2, in northeast Alabama.

The Blue Ridge Environmental Defense League, the Bellefonte Efficiency and Sustainability Team and the Southern Alliance for Clean Energy asked federal regulators to suspend a request by the Tennessee Valley Authority to renew construction permits at Bellefonte.

The groups say TVA hasn't addressed the possible environmental impacts of completing the units at Bellefonte.

& & &

Prior coverage on this blog

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