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Feeding India’s Energy Fix

Prepared by: Carin Zissis
December 8, 2006


The U.S. Congress has reached agreement on a bill approving a landmark deal allowing the United States to provide New Delhi with fuel and technology to expand its civilian nuclear energy program (AP). In July, President Bush and Prime Minister Manmohan Singh announced a framework for the pact, which lifts a three-decade U.S. moratorium on nuclear trade with India in exchange for its acceptance on safeguards on its civilian nuclear facilities. While both houses of Congress negotiated a compromise bill, Undersecretary of State Nicholas R. Burns headed to New Delhi to reassure India’s government (Times of India) about the U.S. version of the agreement. The deal still requires approval by India’s parliament. More difficult to secure is the necessary support of the Nuclear Suppliers Group, which oversees guidelines for sale of the nuclear materials (Asia Times).

New Delhi hopes the deal will help boost its nuclear energy sector. As this new Backgrounder on India’s troubled energy sector explains, the boom in India’s economy coincides with a rising demand for fuels in what is already the world’s fifth-largest energy consumer. Although India ranks relatively low in terms of per capita energy consumption, to sustain its high gross domestic product growth rate—which hit 9.2 percent between July and September this year—the country needs to dramatically increase (PDF) its energy supply, according to India’s Planning Commission. A new report by the Brookings Institution takes a look at India’s growing energy hunger, focusing in particular on oil demands, with the country importing 65 percent of its petroleum supply. India also relies heavily on its own low-quality coal reserves, raising environmental concerns. Testifying to the U.S. Senate Committee on Energy and Natural Resources in July, CFR Adjunct Fellow David G. Victor said, “The nuclear deal probably will lead India to emit substantially less” carbon dioxide.

While supporters of the deal say it provides needed energy opportunities for India and investment possibilities for the United States, critics warn the pact seriously harms the international nonproliferation regime. India, which joined the “nuclear club” when it first conducted a test in 1974, never signed the Nuclear Nonproliferation Treaty (NPT). As Fred Kaplan wrote in Slate, “India would receive the same rewards as countries that had signed the NPT—without actually having to sign it and thus to put up with its restraints.” Meanwhile, a CFR Special Report on the nuclear deal says India’s “attempts to dilute even its limited commitments” have caused concern that the country will try to bargain for a weak nuclear facility inspection agreement with the International Atomic Energy Agency (IAEA). Henry Sokolski, executive director of the Nonproliferation Policy Education Center, writes in the Weekly Standard the Indian government’s reluctance amounts to a “tipping of the nuclear rules meant to render them all but worthless in India's case.”

But proponents of the deal say India has a long history of good faith when it comes to nonproliferation, including self-imposing safeguards on its nuclear program. In a CFR Online Debate with Sokolski, Teresita Schaeffer, director of the South Asia program at the Center for Strategic and International Studies, says India “has consistently protected its military [nuclear] program.” She also points out that India joined the United States in an IAEA board vote against Iran’s nuclear ambitions.

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