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Negotiate to lose?

India’s reach exceeds its grasp,as it seeks extended nuclear liability cover from Russia....

Written by G Balachandran |
August 6, 2010 12:40:42 am

The Indian government,at the last round of commercial negotiations with Russia for the supply of four additional reactors at Kudankulum,had wanted the contract to include a clause allowing for the “right of recourse” to NPCIL to sue the Russian supplier for any nuclear liability that may arise as a result of a nuclear accident due negligence on the part of the Russian supplier.

The Russians have,apparently,refused to accept the Indian suggestion,citing article 13 of the India-Russia Inter Governmental Agreement (IGA) of 2008,which stipulated that “the Indian side and its authorised organisation at any time and at all stages of the construction and operation of the NPP power units to be constructed under the present agreement shall be the operator of power units of the NPP at the Kudankulam site and be fully responsible for any damage both within and outside the territory of the republic of India caused to any person and property as a result of a nuclear incident occurring at the NPP.”

Although the IGA is not a public document,like all India-Russia nuclear agreements,analysts had already concluded that the IGA would have included a clause in the agreement similar to article 13 in respect of supplier liability in case on nuclear accidents,since the Russians themselves had agreed to a similar clause in their nuclear agreements with the French and German suppliers. So the existence of article 13 was no great surprise.

What was surprising was the fact that the Indian side had wanted the Russians to accept the “right of recourse” at all. It was surprising on many counts: the first being the demand by India to include such an article in the contract when (i) the earlier Kundankulum contract had no such clause and was,in fact,identical to the IGA formulation; (ii) as far as known,no international nuclear supplier has ever included such a clause in any of the various supplier-operator agreements that had been concluded so far in international nuclear commerce; (iii) even the current Indian nuclear liability bill under consideration by the parliamentary standing committee on science and technology only gives the operator the “right of recourse” in case of a nuclear incident resulting from “ the willful act or gross negligence on the part of the supplier” and not a blanket “right of recourse” in case of negligence; (iv) no known non-Russian foreign supplier is ever likely to agree to such a clause in their contracts with India and in fact,now that the terms of the IGA are known,are likely to demand similar clauses in their own contracts with the Indian operator thereby nullifying the effects of article 17 (a) and 17 (b) of the Indian nuclear liability bill; and (v) finally and most importantly,the grave consequences for India-Russian nuclear commerce if the Russians insist on negotiating a new agreement in line with their current domestic nuclear export control laws.

It is not well known that during the Yeltsin presidency,the Russians had amended their domestic nuclear export laws to require IAEA fullscope safeguards from non-nuclear weapons states (NNWS) such as India as early as March 1992,while the NSG itself adopted the fullscope safeguards requirement only at the 1993 Lucerne plenary. Also,while the 1993 NSG guidelines did allow for exports to NNWS without fullscope safeguards in “exceptional circumstances”,the Russian export laws were amended only in May 2000 to allow such exports and even then,only to facilitate nuclear fuel exports from Russia to India for Tarapur operations,in the face of stiff opposition from other NSG members,who had held that such exports did not fall under the “exceptional circumstance” exemption. The Russians once again made another such shipment of fuel for Tarapur in 2006,in violation of NSG guidelines,again despite disapproval from other NSG members.

In addition,the 2008 IGA allowed for the transfer of reprocessing technology from Russia to India. So far,this is the only such reprocessing technology transfer that India has been able to negotiate with any other country among the many nuclear cooperation agreements that India has so far negotiated with a large number of countries. The 1998 IGA would thus have enabled Russia to supply such reprocessing technology even if,in future,the NSG amends its guidelines to prohibit such transfer in view of the “grandfather” exemption allowed under NSG guidelines. And in January 2009,the Russians amended their nuclear export laws to make an exception for India to allow such reprocessing technology transfers.

However,in December 2009,the Russian government issued a decree to implement the declaration on non-proliferation of weapons of mass destruction and their means of delivery,adopted at the 2009 L’Aquila G-8 summit,to establish that the export of Russian units of isotope uranium enrichment plant,chemical reprocessing of irradiated nuclear fuel as well as information relating to such installation of equipment and technologies to any state that is not a nuclear weapon state is only to the extent necessary to carry out surveillance or to ensure their construction and operation,without disclosing the key elements of technology associated with such facilities.

Therefore,given the fact that,at the most,India will be only able to include in any contract a “right to recourse” for the operator to the extent specified by article 17(b) of the Indian nuclear liability bill,but such a renegotiation of the IGA in turn will have to conform to current Russian laws in respect of nuclear exports and would,therefore,automatically exclude any reprocessing technology,the net result of such a renegotiation would result in loss to India of any access to reprocessing technology. It makes very little sense for India to insist now on a revision of the IGA. It is an altogether different matter that India should have included in the IGA a clause to the effect that article13 of the IGA will hold only till such time as India enacts a nuclear liability bill in accordance with the international conventions. A similar clause was included in the Russia-Germany agreement and Russia should have had no difficulty in accommodating such an Indian request at that time. India did not do so then and it is too late now unless,of course,the Russian federation agrees to the Indian proposal as a gesture of goodwill.

The writer is visiting fellow at IDSA

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