The 123 Agreement: The American Perspective

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The idea behind the vexed draft of the Indo-US civilian nuclear deal (123 Agreement) flows from the historic summit between Prime Minister Manmohan Singh and President George Bush in July 2005 at Washington. Just four days prior to the Prime Minister setting his feet in the American capital, July 14, 2005, to be specific, the prestigious think tank, Carnegie Endowment for International Peace, brought out a report titled “India as a New Global Power: An Action Agenda for the United States.” Prepared by Mumbai-born Ashley Tellis, one of America’s foremost policy experts, close to the Bush administration, this report outlined a blueprint that is widely believed to be the basis of this nuclear deal. 

Going by the major themes in this report as well as the expressed views of top American officials, the following factors were said to have influenced President Bush while deciding on his India-specific nuclear strategy: 

• To dissuade or prevent China from competing harmfully with it, the United States must mobilise states on China’s periphery to balance Chinese power.
• India is a rising power with great intrinsic merits, including its attachment to democracy and is a natural partner with the United States in the global system. The United States should cultivate a partnership with India and enhance India’s international power. A more powerful and collegial India will balance China’s power in Asia.
• To win over India, the United States should change national and international laws and rules that bar technology co-operation with India due to India’s nuclear weapons and ballistic missile programmes. Changing these rules is necessary to cement the partnership, and such changes also will help India bolster its strategic capabilities, including nuclear weapons and ballistic missiles, which will further balance China’s strategic power.
• India will have to increase its use of nuclear energy in order to fuel economic growth and reduce its rate of greenhouse gas emissions.
• India never has been a threat to the United States or the liberal international system. India’s possession of nuclear weapons breaks no international treaty. India has been a responsible steward of nuclear technology, material, and know-how. India is not a proliferation threat that a smart counter-proliferation strategy must combat; rather it is a partner to cultivate in isolating terrorists and “rogue” states that are proliferation threats. India’s exclusion as an accepted nuclear-weapons power is a historical anomaly that should be corrected.
• The established global non-proliferation regime is predicated on rules that do not sufficiently discriminate between bad actors and good actors. Universal equal compliance with rules will never happen because bad guys will always exist and cheat. The objective should be not to constrain or burden good actors, including the United States and India, but rather to concentrate power on removing or nullifying bad actors. If negotiation and enforcement processes are hung up on equal treatment and mutual obligations, they are a waste of time and political capital. 

Let it be noted here that Tellis and Administration officials, and we will discuss this later, do not exactly agree that the aforesaid six points are the fundamental premises behind the proposed nuclear deal as far as President Bush is concerned. However, broadly speaking, the American strategic community recognises their importance, with some supporting and some dissenting. And those who dissent-they include politicians, strategic experts and influential publications such as The New York Times and Washington Post-are so much against the deal that they, like Indian Communists, will be happiest if the deal finally fails to operationalise. 

These American critics cite many arguments against the deal; but two of them stand out. First, they point out that the strategy of containing China through India is a dangerous game. Convinced that the deal, though civilian in nature, will inevitably strengthen India’s nuclear weapon programme, they point out that policies to balance China by bolstering India’s nuclear-weapons capabilities will have the effect of weakening the non-proliferation regime, ultimately damaging US security. Because, so run their argument, China, which, otherwise, collaborates with other nuclear proliferators such as Pakistan, North Korea, Iran and Libya, is bound to retaliate by further cementing its relations with those “rogue states”. After all, Pakistan would not have acquired nuclear weapons without significant assistance from China, including provision of a tested nuclear-weapons design, which AQ Khan then famously redistributed to Libya and perhaps other countries. In the 1990s China provided significant assistance to Iran’s nuclear programme, including blueprints and equipment for the uranium conversion facility at Isfahan, which Iran has recently reactivated amid great international outcry.

In other words, if nuclear weapons are the great equaliser, why would not China seek to use similar inducements to balance US power?, the critics ask. They further add that China can use its positions in the UN Security Council and the Nuclear Suppliers Group to block Washington’s attempt to change the rules; it may also work towards opening ways so that it is able to sell nuclear favours to its friends as well. 

Secondly, the American critics are aghast at the prospect of the rules preventing proliferation being bent out of shape to accommodate India. Non-proliferation-fundamentalists that they are, they fear that the Indo-US deal will lead to the total collapse of the tent of non-proliferation regime as such. For them, a country-specific exemption that relaxes consensus-based rules of nuclear commerce is the wrong way to bring India inside the tent.  The Non-proliferation Treaty (NPT) and its reinforcing structures have been built on norms, rules, and standards of responsible nuclear stewardship, they point out. While they agree that these rules have not always been followed, they argue that having these rules in place still makes the world safer and provides the basis for prosecution, coalition building, and enforcement against rule breakers. 

Thus, these critics’ contention is that India-specific exemptions will   do real damage to the standards the US seeks otherwise   to impose on trouble-makers.  For them, the way to help India’s nuclear power generation capacity lies in bringing the country inside the existing tent of non-proliferation as a signatory to the NPT. That means, India must abandon, once and for all, its nuclear weapon programme and dismantle its nuclear arsenal. 

How genuine are these criticisms? The supporters of the deal do not seem convinced. As regards the argument pertaining to the China-factor, senior American officials and scholars like Tellis (this is also true with the position of the Indian government) make it clear that the deal is not against China. Such claims are, in their judgment, erroneous. In fact, Tellis has argued elsewhere that Bush Administration’s policy is  “not to push China down but rather to engage it, while simultaneously investing in increasing the power of other states located on its periphery. So unlike the classical realist prescription of undermining China’s growth or the conventional realist prescription of containing it, the core of American strategy has been to engage China, not undermine it, but even as Washington engages Beijing, President Bush is seeking to build a new set of relationships aimed at increasing the power of various countries located along China’s borders. This is indeed a unique policy”. In any case, no Indian government will even like to have nay interest in becoming part of any coalition aimed at containing China. 

The supporters of the deal in the US point out that the real objective of strengthening ties with India is part of “a larger-and sensible-Administration strategy of developing good relations with all the major Asian states” on the assumption that the proliferation of strong democratic states in Asia represents the best insurance against intra-continental instability as well as threats that may emerge against the United States and its regional presence. Strengthening New Delhi and transforming US-Indian ties, therefore, has everything to do with American confidence in Indian democracy and the conviction that its growing strength, tempered by its liberal values, brings only benefits for Asian stability and American security. As Under Secretary of State Nicholas Burns has succinctly put, “By co-operating with India now, we accelerate the arrival of the benefits that India’s rise brings to the region and the world.” 

Similarly, Tellis has argued, “The increasing value of this transforming bilateral relationship with India for the United States will be manifested most clearly in three areas that will be vitally important to American security in this century. To begin with, a strong American partnership with a democratic India will be essential if we are to be able to construct a stable geo-political order in Asia that is conducive to peace and prosperity. There is little doubt today that the Asian continent is poised to become the new centre of gravity in international politics.” 

Most analyses suggest that although national growth rates in several key Asian states-in particular Japan, South Korea, and possibly China-are likely to decline in comparison to the later half of the Cold War period, the spurt in Indian growth rates, coupled with the relatively high, though still marginally declining growth rates in China, will propel Asia’s share of the global economy to some 43 per cent by 2025, thus making the continent the largest single locus of economic power worldwide. An Asia that hosts economic power of such magnitude, along with its strong and growing connectivity to the American economy, will become an arena vital to the United States-in much the same way that Europe was the grand prize during the Cold War. In such circumstances, the (Bush) Administration’s policy of developing a new global partnership with India represents a considered effort at  ’shaping’ the emerging Asian environment to suit American interests in the twenty-first century. 

But how to bring India on the table in sharing this broad strategic objective of the US? The two countries may share many objectives together, but as long as India is considered a nuclear pariah by the United States, both can never be strategic partners in true sense of the term, so run the argument of the supporters of the deal. Again to quote Tellis, “As our ties with friends and allies in Europe and Asia demonstrate, the United States has a variety of bilateral relationships defined by different degrees of intensity and intimacy. What all these relationships have in common, however, is that in no case is any US partner made the deliberate target of a punitive policy concertedly pursued by Washington. Through his proposal for full civil nuclear co-operation with India, President Bush has in effect conveyed his belief that if India is to become a full strategic partner of the United States in this new century, a comparable courtesy must be extended to New Delhi as well. Stated in a different way, the President has recognised that it is impossible to pursue a policy that simultaneously seeks to transform New Delhi into a strategic partner of the United States on the one hand, even as India remains permanently anchored as Washington’s non-proliferation target on the other”. 

Many Administration officials, including Secretary of State Condoleezza Rice, have, therefore, argued before various Congressional committees that far from being an appendage to growing US-Indian ties, bilateral civilian nuclear co-operation promises to become ‘the key that will unlock the progress of our expanding relationship’. It is critical not simply because it will help address India’s vast and growing energy needs-though it will certainly do that-or because it will mitigate the burdens of environmental pollution and climate change in South Asia-though those must be counted among its benefits as well-but because it symbolises, first and foremost, a renewed American commitment to assisting India meet its enormous developmental goals and thereby take its place in the community of nations as a true great power. 

These officials further argue that a strong American partnership with a democratic India will be essential if the US is to succeed in preserving  “an effective non-proliferation system that stems the diffusion of nuclear materials and technologies required for the creation of nuclear weapons.” The central component of civilian nuclear co-operation is critical in this regard because it formalises a bargain that gives India access to nuclear fuel, technology, and knowledge on the condition that New Delhi institutionalises stringent export controls, separates its civilian from its strategic facilities and places the former under safeguards, and assists the United States in preventing further proliferation. Bringing India into the global non-proliferation regime in this way produces vital benefits both for the United States and for all non-nuclear weapons states in so far as it transforms India’s hitherto commendable non-proliferation record, which is owed entirely to voluntary sovereign decisions made by successive Indian governments, into a formal and binding adherence through a set of international agreements. In other words, the deal brings India into the global non-proliferation regime through a lasting international agreement that defines clearly enforceable benefits and obligations, which, not only strengthens American efforts to stem further proliferation but also enhances US national security. 

What happens if India goes against the spirit of the 123 Agreement and the Hyde Act? The Bush Administration has left enough scope for coming out of the nuclear engagement in that case.  Washington will have the right to demand back the plutonium that is stripped out through reprocessing. This is a critical element of the agreement to ensure that the US cannot be accused of violating its NPT obligations. This right is embedded in Article 14 of the 123 Agreement, which allows either party to terminate the agreement on the basis of a one-year written notice. 

Similarly, ensuring that the US maintained the right of recapture the ability to demand back any US-origin nuclear fuel or technology in the event of a future Indian nuclear test is an important part of the agreement from the US perspective. The US Congress remains concerned, however, about related clauses in the agreement that say the US will help India develop a strategic reserve of nuclear fuel for the entire life-time of the reactors. The US also agrees to create conditions for “India’s assured and full access” to the international fuel market. 

On the surface, this language may appear at odds with the non-binding provisions of the Hyde Act that urge Washington to limit India’s access to fuel supplies from other countries in the event of a termination of the bilateral agreement. However, American analysts supporting the deal point out that the 123 Agreement language does not violate the Hyde Act since the fuel access provisions are a part of the agreement itself and would terminate along with the agreement if, for example, an Indian nuclear detonation triggered Section 106 of the Hyde Act, terminating US-India civil nuclear co-operation. 

All told, one may conclude by pointing out that the 123 Agreement does not resolve a fundamental disagreement between the United States and India -the US continues to support the objectives of the NPT and to adhere to its requirements. But, India does not support the NPT and seeks to be recognised as a de jure nuclear-weapons state. The purpose of this Agreement is, thus, to limit the negative impact of this enduring disagreement on the broader Indo-US relationship. As it is, key nuclear countries such as Russia, France, the United Kingdom, Australia and Canada appear to support this deal. These countries understand India’s increasingly important role on the world stage. The US, therefore, would not let this deal get killed and miss an opportunity to put itself in a strong, strategic position to meet the challenges of the 21st century-the century of the Asia-Pacific region.