Once bitten, twice shy. Having stood by in 1998, with a frown on its face, watching South Korea score with India when the latter chose not to impose economic sanctions after the “Shakti” nuclear tests, Japan has been quick to follow its neighbour this time, engaging India in talks for cooperation in civil nuclear energy. Japan has come a long, long way in 12 years.
It was in December 1998, six months after Pokhran-2, that I found myself in Tokyo as the youngest member of a group of wise men that included the late J N Dixit (former National Security Adviser of India), N N Vohra (the present governor of Jammu & Kashmir), Arjun Asrani (a distinguished former Indian ambassador to Japan) and Jasjit Singh (then director, Institute of Defence Studies & Analysis). We were all sent there to convince a similar group of influential Japanese that Japan should consider withdrawing the sanctions it had imposed in the wake of India’s nuclear tests and take advantage of the economic opportunities in India, striking a strategic partnership.
The Japanese side was led by the wise and thoughtful Matsunaga-san, a former Japanese ambassador to the United Nations. In his crisp, soft and no-nonsense style, Ambassador Matsunaga summed up the Japanese view, having spelt out Japan’s stated position that it is the only victim of a nuclear attack: “Japan understands why India has tested, but Japan cannot appreciate.” Your “understanding” is enough for now, we told our Japanese interlocutors, we can wait for your “appreciation”!
Twelve years later, as India’s civil nuclear energy business begins to open up, companies like Hitachi and Toshiba are helping Japan’s policy-makers appreciate the benefits of coming to terms with India’s nuclear power status. Just the way General Electric and Westinghouse helped US senators and Congressmen appreciate the economic benefits to their constituents of doing business with India.
Last week, Indian and Japanese diplomats met in Tokyo to discuss the prospects of Japan recognising India’s nuclear status which, in turn, would open up business opportunities for Japanese companies in India. At least one motivating factor that would have stirred Tokyo’s dour diplomats would have been South Korea’s decision last month to sign up on a civil nuclear cooperation agreement. In January 2008, during Prime Minister Manmohan Singh’s visit to Beijing, even China flagged its interest in investing in India’s nuclear energy sector.
At the other end of the world last week, in Toronto, Prime Minister Singh got Canada, a country that has good reasons to be sour with India on the nuclear energy issue, given India’s “can do” history with Candu, to sign up on India’s ninth civil nuclear energy cooperation agreement. In the same week, Australia’s ruling Labour party got rid of a prime minister who was dragging his feet on an India-Australia nuclear cooperation agreement and replaced him with a lady who is willing, we are told.
It all started with George Bush! Today India has in place civil nuclear cooperation agreements with Argentina, Britain, Canada, France, Kazakhstan, Mongolia, Namibia, Russia and the United States. The Kazakh, Mongolian and Namibian deals are mainly focused on uranium supply. Other agreements will enable India to get uranium, for existing and future reactors, and access to nuclear technology.
At the end of five years of diplomacy, Prime Minister Singh has stitched up enough agreements to power India’s nuclear energy programme. The challenge now is to get a nuclear liability Bill in place that will enable investors to come. In two important essays published in this newspaper, nuclear policy expert G Balachandran has convincingly articulated the case for a nuclear liability Bill that awaits scrutiny and approval by Parliament.
In his first essay (BS, July 2, 2010: www.business-standard.com/india/news/g-balachandrannuclear-liability-bill/396433/), Balachandran refers to the liability clauses of the Russia-France agreement, which states: “The Russian party shall bring no claims against the French party or against suppliers on grounds of nuclear damage resulting from a nuclear incident which has taken place within the territory of the Russian Federation. The Russian party shall grant the French party and the suppliers appropriate legal protection and shall exempt them from liability for damages in the event of claims by third parties on grounds of nuclear damage resulting from a nuclear incident which has taken place within the territory of the Russian Federation.”
In his second important column (BS, June 24, 2010, www.business-standard.com/india/news/g-balachandran-limits-to-changes-in-nuclear-liability-bill/399195/), Balachandran makes the telling point that any Bill going beyond existing global conventions and similar bilateral agreements will result in India not getting access to required technology. If the objective of the nuclear liability Bill is to prevent any investment in nuclear energy, then India can have its own sui generis law that pleases Parliament but gets no private investment. We can pat ourselves on the back and go dig for coal.
If India’s objective is, in fact, to get private investment in nuclear energy and secure access to technology, then a liability Bill is a must, albeit one that addresses legitimate concerns about operator and supplier liability.
Finally, India also needs a policy framework that will enable Indian companies to grow and attain scale and depth in the nuclear power equipment business. Indian companies, like L&T for example, complain that they are being denied a level-playing field in the nuclear power business and that existing policy on nuclear power plants may end up favouring global players who export equipment to India against domestic manufacturers.
Fighting a rearguard battle against cheaper power equipment imports from China, L&T hopes that at least in the nuclear power equipment business, Indian companies will not get a raw deal! But even L&T wants the Indian Parliament to pass the nuclear liability Bill!