NSG deadlock, some say don146;t allow enrichment, reprocessing

8220;Participating governments exchanged views in a constructive manner, and agreed to meet again in the near future to continue their deliberations,8221; said the NSG in a public statement after the two-day meeting in Vienna today.

While no country opposed an exemption for India, a few countries like New Zealand, Ireland and Austria argued the need to address non-proliferation issues in a far more specific manner. In particular, countries wanted the US to spell out the consequences in case India was to conduct a nuclear test in the future. Many other countries suggested technical changes like closing the door on transfer of ENR enrichment and reprocessing technology.

US made it clear to NSG that any reference to this will result in India walking away from the nuclear deal which would be more detrimental to wider non-proliferation objectives. More so, it argued that several countries that are not involved in nuclear exports would also benefit from dual-use technology trade with India.

The other two principal suggestions included setting up a review or monitoring mechanism and prohibiting sale of ENR technology. Several countries challenged the first suggestion, as any such mechanism would deter companies looking to make long-term investments in India8217;s nuclear sector.

However, there seems to be growing consensus on banning sale of ENR technology. Even the India-US 123 agreement does not allow transfer of such technology. Sources said US may push for this because it had been backing an amendment to the NSG guidelines banning ENR transfers.

Only this year did it change its position and proposed a criteria-based approach largely due to growing pressure from countries like Canada and South Africa that were keen to ENR technology trade. But the first criteria in the new US proposal was that ENR trade will be restricted to NPT countries. This suited Canada as it was in sync with its domestic laws.

This proposal was discussed at the Berlin plenary of the NSG but no consensus was achieved after France and Russia raised questions. While this remained pending, India8217;s case has made matters complicated for Washington. Russia and France oppose any such restriction on India and for its part, Canada would like such a prohibition as it would not be able to compete largely due its domestic laws regardless what NSG says.

As a result, sources said, there is growing pressure that India be kept out of ENR trade for the moment. New Delhi, for its part, argues that having got the right to reprocess in the 123 agreement, it makes little sense to stop access to the technology that would be needed for this.

But given that India says it has its own indigenous ENR capabilities, this issue could be one on which Washington may lean on India to accept a change in a bid to resolve matters in the NSG.

Late tonight, Indian and US delegations met to discuss the future course as the next week will be spent working out a draft that may be acceptable to all sides without impacting the Indo-US nuclear deal negatively.

The biggest handicap for Washington is that it does not have much time as the Congress meets on September 8 and, therefore, a decision will have to be made at the next meeting if the Bush Administration wants to take a shot at completing process during its term.