Siddharth Varadarajan

Journalist | Writer | Analyst

Insulating India’s reactors from fuel disruption

In the tussle between test and text, what will be decisive is the political resolve to defend the sovereign rights enshrined inthe 123 agreement.

8 August 2007
The Hindu

Insulating India’s reactors from fuel disruption

Siddharth Varadarajan

Running like a ‘sacred thread’ through the length of the nuclear cooperation agreement with the United States, India’s right to run its reactors without interruption and take “corrective measures” in the event of fuel supply disruptions provides the ultimate textual insurance against the kind of uncertainty that plagued Tarapur following the 1974 nuclear explosion at Pokhran. But beyond the sanctity of words lies the world of politics. When push comes to shove, the U.S. and India will both have to decide how far they are prepared to go in confronting each other — the former by deviating from the very clear procedures and steps it has committed itself to following in the event of a new Indian nuclear test, and the latter by taking the 123 agreement’s protections to their logical conclusion, even if this leads to a serious political rupture with Washington.

Under Section 123a(4) of the U.S. Atomic Energy Act, every nuclear agreement with a non-nuclear weapons state must include a clause granting the U.S. the right to seek the return of nuclear material and equipment exported pursuant to the agreement, in the event of the recipient state exploding a nuclear device. Since the premise of the July 18, 2005, Indo-U.S. statement on civilian nuclear cooperation was that Washington was prepared to accept India’s de facto nuclear weapon status, the Bush administration should have ensured the waivers it sought to the Act covered this requirement for nuclear commerce as well. Unfortunately, it did not.

When formal negotiations on the text of the bilateral nuclear agreement started earlier this year, the U.S. made it clear the ‘right of return’ would have to be included. The Indian side had two options. It could either walk away or try to make the best of a bad situation by crafting balancing provisions. In choosing the latter, India’s negotiators sought to enshrine the commitments the U.S. had made in July 2005 and March 2, 2006, and protect the country from disruptions that would inevitably result from any American attempt to take back nuclear fuel or vital reactor components following an Indian test.

A careful reading of the final 123 agreement — and in particular Article 5.6 on fuel supply assurances, Articles 13 and 14 on the procedures the U.S. would have to follow in the event of invoking its right of return, Article 10.2 on safeguards and Article 16.3 on duration — shows that their efforts have been more than successful. A solid web of protection has been woven by the interlocking nature of all rights and commitments contained in the agreement. While the Bush administration can claim the “right of return” has been “preserved” and “protected,” the Manmohan Singh government can also state with confidence that this right has been so effectively boxed in as to render it harmless for all intents and purposes.

To understand why this is so, let us consider a hypothetical situation of termination and see how the different layers in the agreement might conceivably work even in the worst case scenario at each stage. Assume the year is 2020, and India is running one 1000 MWe U.S.-supplied light water reactor with low enriched uranium supplied by the U.S. India also maintains an LEU stockpile equivalent to 20 years consumption by the reactor, the bulk of which has been provided by the U.S.

If on January 1, 2020, the Government of India were to test a nuclear weapon, the U.S. would immediately serve notice for the termination of the 123 agreement invoking Article 14.1. Under 14.2, India and the U.S. would then have to “promptly hold consultations” on the “relevant circumstances,” including whether India’s test “resulted from [its] serious concern about a changed security environment or as a response to similar actions by other States which could impact national security.” The importance of relevant circumstances is further reinforced by Article 13.1’s stipulation that consultations on termination would be between “two States with advanced nuclear technology” with the “same responsibilities and practices” as other such countries. If India’s test followed that of another country, the consultation process ought to end quickly and the notice of termination withdrawn. If the Indian test was “unprovoked,” India could still claim a change in the security environment. However, since this exercise is about worst-case scenarios, let us assume the U.S. is unmoved by India’s reasons.

Though termination kicks in one year after notice is served, Article 14.2 allows the U.S. to cease cooperation immediately if it feels the consultations under that Article are not going anywhere. By now, even if a few rounds of consultations have been held prior to cessation of cooperation, we would already be in, say, February. Once the cessation of cooperation takes place, Article 14.4 gives the U.S. the right to seek the return of nuclear equipment, material, and fuel transferred to India. This right can only be exercised after “cessation” and until the time termination actually takes place (i.e. by January 1, 2021, in our example). However, let us assume the U.S. invokes its right of return on February 1, listing not just LEU stocks for the reactor it supplied but also certain critical reactor components, knowing that the reactor would be disabled as a result.

Once this notice is served on India and before any items can actually be returned, the U.S. is obliged under Article 14.5 to again consult with India. Indeed, the exercise of this right must pass through a number of legally binding filters. To begin with, consultations “shall give special consideration to the importance of uninterrupted operation of nuclear reactors” in India. Let us assume the U.S. says, “We have given special consideration to the running of your reactors but we still want our material back”. However, Article 14.6 says no item can be returned without India being compensated “for the market value thereof and for the costs incurred as a consequence of such removal.” The latter costs are quite open-ended (which is why they do not figure in any other 123 agreement) and return cannot take place unless India and the U.S. agree on the amount of compensation to be paid.

Article 14.7 also provides for one more hurdle prior to any return of nuclear material: India must satisfy itself that “that full safety, radiological and physical protection measures have been ensured in accordance with [its] existing national regulations” and that no risk will be posed to the “global environment” in the process of return.

Even if India is able to stretch this process out for several months, there may come a time when the compensation and safety issues are finally sorted out. At this point, however, the process loops back because if the continuous operation of the U.S.-supplied reactor is no longer possible, this would violate the U.S. commitment in Article 14.8 that “the Party seeking the return of nuclear items shall ensure that the timing, methods and arrangements for return of nuclear items are in accordance with paragraphs 14.5, 14.6 and 14.7,” the most important provision of which is continuous operation of reactors.

Accordingly, 14.8 provides for yet another round of consultations, this time aimed at addressing the “mutual commitments” to assured fuel supply contained in Article 5.6. To drive home this linkage, 14.8 states: “It is not the purpose of the provisions of this Article regarding cessation of cooperation and right of return to derogate from the rights of the Parties under Article 5.6.” So tight is this linkage between the right of return and the continuous operation of the U.S.-supplied reactor that the “timing” of any return, especially fuel, can only be calibrated with the replacement of U.S. material with material provided by other “friendly countries.”

“Corrective measures”

But what would happen in a scenario where no friendly country is willing to make good the fuel supplies the U.S. wants returned? This would trigger the situation envisaged by 5.6(c) — the right of India to take “corrective measures … to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies.” The legal status of these corrective measures has been further enhanced by three additional clauses in the 123 agreement. In 14.8, the U.S. recognises them as India’s “rights”; in Article 10.2, India explicitly states it is agreeing to place U.S.-supplied nuclear equipment and material under IAEA safeguards in perpetuity not in a free-standing manner but “taking into account Article 5.6 of this Agreement”; and Article 16.3 on entry into force and duration clearly states: “notwithstanding the termination … of this Agreement,” India’s rights under Article 5.6(c) “shall continue in effect” so long as U.S.-supplied material remains in India.

No one in government has ever explained what these “corrective measures” might be. However, the 123 agreement’s clear link between the perpetuity of IAEA safeguards — even on U.S.-supplied material — and the assured supply of fuel for the lifetime of all of India’s civilian reactors provides a powerful deterrent to any U.S. desire to seek the return of exported material or terminate the agreement. For, once the U.S. invokes 14.1 and serves notice of termination, it is likely to set in motion a sequence of steps and counter-steps that could end with the suspension of safeguards by India.

How would our post-test scenario of 2020 compare with 1974 or 1998? One difference is that unlike then, the U.S. now would have the right of return. But the very process of invoking that right — as outlined above — would trigger a set of legally binding Indian rights that did not exist in 1974 or 1998. On balance, therefore, it is obvious that India would be in a much better position to forestall any disruption to its civilian energy programme if the U.S. were to try and penalise it for conducting a nuclear test, provided it actually creates a fuel stockpile

Under a worst-case scenario where the U.S. ignores its obligation to ensure the continuous operation of Indian reactors, presumably citing the Hyde Act, India would be under no obligation to entertain an American request for the return of nuclear items. If a U.S.-supplied fuel stockpile exists on Indian territory, India could continue using that fuel if not doing so means disrupting the operation of its reactors. Possession is more than nine-tenths of the law. However, the Indian Government of the day must be prepared to uphold its sovereign rights, even if it means incurring the wrath of the U.S. The best agreement in the world is worthless if the men who must implement it turn out to have weak knees.


One comment on “Insulating India’s reactors from fuel disruption

  1. Anonymous
    August 9, 2007

    Legal guarantees, negotiations over fine print etc can only go thus far. I agree with you that the rest depends on the chutzpah of Indian governments. After all China tested in 1964, negotiated a nuclear trade agreement with US in 1985 which got operationalised in 1998 but has gone about protecting and expanding its self interest.shivanand

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This entry was posted on August 8, 2007 by in Indian Foreign Policy, Nuclear Issues.



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