Exuding personal chemistry in a show of bonhomie, Prime Minister Narendra Modi and US President Barack Obama announced Sunday a “breakthrough understanding” on the nuclear liability issue which has stalled operationalisation of the 2008 civil nuclear agreement between the two countries.
Meeting for three hours over lunch and tea in Hyderabad House after Modi broke protocol to personally receive Obama and wife Michelle at Palam airport, the two leaders, signalling their determination to make a new start and erase the friction of history, unveiled plans to cooperate on issues ranging from defence to trade, technology transfer to counter-terrorism, Asia Pacific to Indian Ocean. A hotline between Modi and Obama was also announced.
But the big takeaway of the day was the progress on the vexed nuclear liability issue. Making a joint appearance after their meeting, Obama said: “Today, we achieved a breakthrough understanding on two issues that were holding up our ability to advance our civil nuclear cooperation, and we’re committed to moving towards full implementation. And this is an important step that shows how we can work together to elevate our relationship.”
Describing the 2008 civil nuclear agreement as the “centrepiece of our transformed relationship which demonstrated new trust”, Modi said: “Six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability.”
Indian liability clauses and the US demand that it be allowed to track fissile material it supplies to India have come in the way of commercial operationalisation of the agreement, keeping out US suppliers.
After the two leaders met, US Deputy National Security Advisor Ben Rhodes told American journalists: “In our judgment, the Indians have moved sufficiently on these issues to give us assurances that the issues are resolved.’’ He said it was now for US supplier firms to assess the market and take a call. He said neither country needed to take legislative action to complete the agreements the leaders reached Sunday.
Briefing reporters, Foreign Secretary Sujatha Singh said: “We have broken the logjam of the past few years. Based on three rounds of discussions in the Contact Group, we have reached an understanding on two outstanding issues namely civil nuclear liability and the administrative arrangements for implementing our 123 agreement. Let me underline, we have reached an understanding. The deal is done. Both these understandings are squarely within our law, our international legal obligations, and our practice.” She added that the “political leadership played a key role” in breaking the deadlock.
During three meetings of the India-US contact group spread over 45 days, The Indian Express first reported that India gave a legally-worded assurance that the suppliers will not be liable under tort law claims — a civil wrong addressed by awarding damages. This assurance to US companies, GE and Westinghouse, is said to have broken the logjam.
Asked whether the Attorney General of India will give the assurance in the form of a memorandum, Joint Secretary (Disarmament and International Security) Amandeep Singh Gill, who negotiated with the US on the nuclear liability issue, said: “That is work in progress.”
On the issue of right to recourse under the India nuclear liability law, India is going to create an insurance pool of Rs 1,500 crore which will take care of the suppliers’ liability. This pool will be created by General Insurance Corporation and four other insurers who will put in Rs 750 crore while operators and suppliers will provide the remaining Rs 750 crore.
Gill said: “The India Nuclear Insurance Pool will be a risk-transfer mechanism. Globally, there are 26 such insurance pools. The details of the premium will be worked out. It is a complete risk management solution.”
Foreign Secretary Singh said assurances were given to the US on both the liability clause and the tracking issue. “The liability provisions and administrative arrangements finalised under 123 Act (tracking) are consistent with our bilateral legal arrangements and contracts, IAEA safeguards and international laws and obligations,” she said.
“We have an administrative arrangement with Canada and that has been the template for finalising our administrative arrangement with the US,” Gill said. India is learnt to have stuck to its position of allowing only IAEA inspectors for tracking nuclear material.
Noting that the Contact Group set up in September 2014 to advance implementation of bilateral civil nuclear cooperation met three times in December and January, the joint statement said: “The leaders welcomed the understandings reached on the issues of civil nuclear liability and administrative arrangements for civil nuclear cooperation, and looked forward to US-built nuclear reactors contributing to India’s energy security at the earliest.”
Obama said the two countries had also made progress on defence partnership and decided to renew the framework agreement for another ten years. “Today, we have also decided to take our growing defence cooperation to a new level. We have agreed, in principle, to pursue co-development and co-production of specific advanced defence projects.”
Modi said: “These will help upgrade our domestic defence industry and expand the manufacturing sector in India. We will also explore cooperation in other areas of advanced defence technologies.”
On defence and security, Foreign Secretary Singh said both countries have agreed on four projects under the Defence Technology Transfer Initiative (DTTI) including exploration of development of advanced jets in India. She said the four “pathfinder projects” are: next generation Raven Minis UAVs, roll-on roll-off kits for C-130s, mobile electric hybrid power source and Uniform Integrated Protection Ensemble Increment II.
“What we have done is to operationalise an initiative and identified projects,” Indian Ambassador to the US S Jaishankar said.
On terrorism, Modi said “it remains a principal global threat taking on a new character even as existing challenges persist”.
“We agreed that we need a comprehensive global strategy and approach to combat with it. There should be no distinction between terrorist groups. Every country must fulfil its commitments to eliminate terrorist safe havens and bring terrorists to justice,” he said.
He said the two countries will deepen their bilateral security cooperation against terror and enhance counter-terrorism capabilities, including in the area of technology.