Tag Archives: 123 Agreement

The Other Side of Geneva

28 Thu Nov 2013

Posted by in Iran, Middle East, Nuclear

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The euphoria over the recent Interim Nuclear Agreement with Iran, despite a few discordant voices, has been global. The agreement eased the buildup of political pressure in the region over the last six years and it has set an optimistic stage for negotiations to begin. The difficult issues well known, the path ahead remains long and arduous, and one wonders if either side knows what an acceptable comprehensive solution to Iran’s nuclear question would look like. We should all wish for a timely and mutually satisfactory resolution to the matter, but the focus on the technical aspects of a resolution may have taken for granted, unwarrantedly, an underlying philosophy of nuclear proliferation.

One difference between the two sides is in their different interpretation of Article IV of the Non-Proliferation Treaty (NPT). Tehran argues that the clause gives each member of the NPT the inalienable right to pursue peaceful nuclear activity, including enrichment, while the United States believes that the NPT confers no such right. On this, Washington’s case appears to be weak; the inalienable right is, however, contingent upon conformity with Article II which states that non-nuclear weapons states will not seek, directly or indirectly, to weaponise their nuclear technology. What this implies is that Iran may enrich uranium to whatever level it chooses – if it plans to develop nuclear submarines, even 90% enrichment may be required – as long as there is adequate verification that Iran is not diverting the fissile material to a secret weapons programme.

The objection to the US interpretation is that it uses the NPT to achieve non-proliferation creep – overstate its mandate. In fact, Article IV (2) even says that members are allowed “the fullest possible exchange of equipment, materials and scientific and technological information for the peaceful uses of nuclear energy,” a clause the US refuses to honour via its infamously stringent Gold Standard 123 Agreements for civil nuclear cooperation. This should concern all countries that engage in nuclear power for it casts doubt on their “inalienable right to develop research, production and use of nuclear energy for peaceful purposes” and have implications on its nuclear commerce with the United States.

Oh, what a difference signing a treaty makes! While Iran’s nuclear programme has received so much (negative) attention in the Western media, Israel has escaped with little mention. Patrick Pexton wrote in 2012 that going back a decade in the Washington Post‘s archives, he found little reporting of Israeli nuclear capabilities. Similarly, Micah Zenko noted that “Iran” and “nuclear” has appeared 603 times in the New York Times headlines since January 01, 2000. In the same period, Russia was mentioned 86 times, China 52 times, and Pakistan 48 times. Tehran’s claim, therefore, that it is being singled out for attention and punishment is hard to refute.

Israel is another bugbear for Iran, not only militarily and strategically, but also in terms of the “nuclear nepotism” it enjoys from the United States. Despite maintaining complete nuclear ambiguity – amimut – it is no secret any longer that Jerusalem has a robust nuclear arsenal. The revelations by Mordechai Vanunu, some excellent scholarship by Avner Cohen, and the cloaked statements by Israel’s own officials leave little doubt that Israel indeed has a clandestine nuclear programme; though the US media does not want to talk about it, the Middle East most certainly does. Saudi Arabia has been quiet as tensions with Iran have risen as Riyadh sees Tehran to be a more immediate threat than Jerusalem, but it was not too long back that Iran and the Arabs, including Saudi Arabia, were insisting that talk of a Middle East Nuclear Weapons Free Zone would not hold any meaning without Israel’s participation. Tellingly, in 1985, Iran had called out to Libya and Syria for them all to develop nuclear weapons as a counter to the Israeli nuclear threat. Iran is sure to point out Western double standards with Jerusalem but as a non-signatory to the NPT, Israel technically enjoys a little more leeway than Tehran.

This nuclear hypocrisy is not new; even before the ink was dry on the NPT, the United States deliberately kept its interpretation of the NPT with respect to nuclear sharing between NATO countries secret from other signatories, particularly the Non-Aligned Movement. Later, in the 1980s, the United States looked the other way as Pakistan clandestinely developed its nuclear weapons; when the illicit nuclear proliferation network of AQ Khan was exposed in 2004, Pakistan got a mere slap on the wrist. Pakistan’s nuclear ties with China have also gone without invoking reprimand from Washington or the European Union. The 2008 nuclear deal that Washington aggressively lobbied for with India, whatever its justification, is not in the spirit of the nuclear non-proliferation regime either, and at home, Washington has embarked on a multi-billion dollar nuclear modernisation programme. It is difficult not to concede the point to Tehran that non-proliferation is a matter of convenience for the United States.

While Iran may be called to task for forgetting that its Article IV rights under the NPT must stand in conformity with Article II (or for that matter, forgetting the safeguard stipulations of Article III), one wonders if the five recognised nuclear powers (N5) may be called to task for failing to remember the provisions of Article VI (nuclear disarmament). What yardstick is there to verify that the N5 have been responsible and true to their word? Keeping aside the insanity of accumulating over 120,000 (!!) warheads between the United States and Russia since 1945, it is of little comfort to note that the same two countries still hold approximately 95% of the world’s nuclear arsenal. The greatest violators of the NPT are, in that sense, the United States and Russia.

These issues undermine any genuine nuclear non-proliferation because the whole agenda is seen to be laced with US national interests. The overwhelming presence and reach of US media and its reference mostly to research from US think tanks has dramatically skewed international perception in favour of an American hegemonic discourse of nuclear non-proliferation. Admittedly, US research institutes are among the best in the word in terms of funding, scholars, and research, but a quick glance through the position papers produced by other countries, particularly those in the glare of the nuclear witch hunt, shows strong reservations expressed over vertical proliferation, nuclear apartheid, and other concerns. A blunt declaration of national interest would be understandable and less insulting than the hypocrisy of moralpolitik.

As long as such resentment exists, there cannot be a comprehensive solution. Iran may buckle under economic sanctions for now, but this may only be a sign that it has learned its lesson from this episode well; if it decides to pursue a nuclear weapons programme in the future, it will tread far more gently and when it is in a better position to withstand US and EU pressure. If the negotiations for a comprehensive solution between the E3+3 (France, Germany, Britain + Russia, United States, China) and Iran focus merely on the technical issues of verification and curtailing enrichment & reprocessing, the potential reasons for Tehran’s suspected quest for nuclear weapons will not have been addressed and could remain a sore spot for future conflagrations.

In the game of accusations and counter-accusations between Iran and the West over the NPT – what Hindi speakers refer to in a manner that is more onomatopoeically pleasing as तू-तू मैं-मैं (tu-tu main-main) – an interesting anecdote comes to mind. It recently came to light that Russia has been violating the Intermediate-Range Nuclear Force (INF) Treaty it signed with the United States in 1987. Under this treaty, both superpowers are forbidden to develop nuclear missiles with a range between 500 kms and 5,500 kms, but Russia has indicated several times of late that it plans to withdraw from the treaty. When asked to comment, Sergei Ivanov, Chief of Staff Presidential Administration of Russia. replied, “Why is it that everyone and anyone can have this class of weapons and we and the United States cannot? The question arises. On the one hand, we signed the Soviet-American agreement. We perform, but it cannot go on for infinity.” One could ask the same thing of the United States and the four other nuclear powers about the NPT.

This post appeared on Daily News & Analysis on December 03, 2013.

Peace In Our Times?

24 Sun Nov 2013

Posted by in Iran, Middle East, Nuclear

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Sunday morning brought with it news that a major breakthrough had been achieved in the nuclear negotiations between Iran and the P5+1 (the five permanent members of the United Nations Security Council – United States, France, Russia, Britain, China – and Germany, Iran’s key trading partner), and that an interim agreement had been reached. Temporarily, at least, the war drums had been silenced.

The deal has its critics on both sides of the fence – Iran’s Supreme Leader, Ali Khamenei, did not make matters easy with his outbursts (though he has hailed the deal after the fact), nor do Iran hawks in the US Congress with talk of additional sanctions. In that sense, many suspect that it will be harder for US Secretary of State John Kerry and Iranian Foreign Minister Javad Zarif to sell the deal to the more conservative elements in their own countries than to each other. Saudi and Israeli opposition to the deal as an outline emerged after last week’s talks in Geneva has also been consistent and vocal. Unsurprisingly, the Iranian announcement of the interim agreement came together with the usual symbolic defiance – the Atomic Energy Organisation of Iran declared its plans to construct two more power reactors at Bushehr.

The interim deal is, all things considered, a fair one; Iran receives some sanctions relief and the P5+1 are assured that Iran does not continue to inch closer towards nuclear weaponisation. The deal is set to expire after six months, giving time for negotiators to hammer out the terms and conditions for the next phase of a complete resolution to the Iranian nuclear question.

Towards the P5+1’s non-proliferation goals, the deal promises to:

  • halt enrichment at 5% and dilute all higher-enriched material to below that level
  • not add or upgrade centrifuges and limit production to repairs only
  • not increase stockpile of 3.5% enriched uranium
  • not commission or fuel the Arak heavy water reactor
  • halt fuel assembly for Arak and not install additional components to the reactor
  • not transfer heavy water or fuel to reactor site
  • not construct a reprocessing plant

In effect, these measures shut down Iran’s potential plutonium path to a nuclear weapon as well as severely curtail its uranium enrichment. Even if talks were to fall apart in a few months, Iran’s breakout time will have been substantially increased.

Towards the P5+1’s verification goals, the deal promises to:

  • provide the IAEA access to centrifuge and rotor assembly and storage facilities
  • provide the IAEA access to uranium mines and mills
  • provide the IAEA with Arak reactor designs
  • install surveillance cameras at Natanz and Fordow and provide daily access
  • provide frequent access to the Arak reactor

The increased transparency of Iran’s nuclear facilities at Natanz and Fordow, not to mention centrifuges, mines, mills, and storage facilities, make it very difficult for Iran to develop nuclear weapons on the sly. If these conditions are implemented and made permanent, Iran would effectively need an entire clandestine, parallel nuclear programme to bypass international scrutiny – the possibility of which is next to nil.

In return for the non-proliferation and verification Iran has agreed to, the country will be granted temporary, limited, relief totalling approximately $7 billion in the form of:

  • no new sanctions during the period of the deal
  • suspension of sanctions on gold, precious metals, petrochemicals, and auto sector to the tune of $1.5 billion
  • payment in installments, totalling $4.2 billion, from the sale of Iranian oil at present levels
  • unfreezing of $400 million for Iranian government tuition assistance to its international students
  • safety-related repairs of Iranian airlines

It is important to note that these measures will remain active for only a fixed period – after that, unless extended, Iran will again come under sanctions. This gives P5+1 negotiators time to discuss the complex issues involved with their Iranian counterparts without being accused at home of allowing Iran to creep up to the bomb. It also shows Iranian negotiators that P5+1 demands to halt the Iranian nuclear programme during talks is not a backdoor to shutting down the programme permanently if negotiations drag on endlessly.

Second, Iran receives limited relief from sanctions – the bulk of the sanctions architecture remains in place and only a tiny spigot is loosened to allow Tehran access to its own funds. Not only is the time period for relief small, the amount of relief is also small and not external to Iran’s revenue stream.

A point of concern is that the interim deal has already been interpreted differently by the two sides. Furthermore, the text of the Interim Nuclear Agreement and the US State Department’s Fact Sheet: First Step Understandings Regarding the Islamic Republic of Iran’s Nuclear Program, bear some discrepancies. A document of this import would certainly have gone through lawyers and translators to eliminate any grounds for misunderstanding. Yet, there exist some discrepancies with potentially enormous consequences on not only the interim agreement but the future of nuclear negotiations with Iran:

  • the Iranian document mentions that half of the 20% enriched uranium will be retained for fuel fabrication for the Tehran Research Reactor, of which there is no mention in the US document
  • the Iranian document suggests that this is a first step towards a comprehensive solution to the nuclear imbroglio which both parties will conclude within one year of this agreement but the US document sets the countdown at six months without mention of possibility of renewal
  • the Iranian document suggests that the final agreement would “[i]nvolve a mutually defined enrichment programme with mutually agreed parameters consistent with practical needs.” This line is not present in the US text and is of utmost importance in the understanding of this interim agreement.

Many observers are wondering what this deal means beyond its nuclear aspect. For now, there is no ‘beyond’ the nuclear deal. In fact, there are already many doubts about this deal. However, Iran might choose to ignore the question hanging over recognition of its right to enrich uranium and avail of the sanctions relief while insisting on its position during further discussions.

An interesting admission both the Iranian and US releases make is that the complete resolution will have to consider, among other things, UNSC resolutions. Ignoring the final position on Iran’s enrichment rights for now, the interim nuclear agreement allows Tehran, albeit not explicitly, to enrich uranium up to 5%. Does this acceptance violate UNSC Chapter VII Resolutions 1696 and 1737 (legally binding), both of which call for a suspension of Iran’s enrichment activity during negotiations? This may be one reason that Kerry declared that Iran’s enrichment has not been recognised. Were Zarif’s interpretation of the treaty accepted, it would not only recognise Iran’s right to enrich under the Article IV of the NPT but also nullify the ruling of the UNSC resolutions. This is a question for the lawyers, but one solution would be for the UNSC to pass a resolution supporting the interim agreement; another would be to maintain the façade of Kerry’s interpretation until a comprehensive agreement is reached.

If the interim nuclear agreement does not accept Iran’s right to enrich uranium, the P5+1 have given away next to nothing to achieve a temporary halt in Iran’s nuclear march and will gain a better knowledge of the Arak reactor. Seen in this light, the agreement tilts convincingly in favour of the P5+1; after all, $7 billion of relief over six months (or a year) is minuscule in comparison to the $100 billion in frozen Iranian assets globally or the $4 billion per month in lost oil revenue.

If the interim nuclear agreement does recognise Iran’s right to enrich uranium, the additional transparency measures Iran has agreed to will still go a long way in building confidence in Tehran’s intentions. However, Iran will have severely dented the US 123 Agreement Gold Standard and carved out a place in the non-proliferation hierarchy somewhere above non-nuclear weapon states (who have no enrichment and reprocessing rights) and below India (which has military nuclear facilities too). From this perspective, if Iran’s assertions that it does not want nuclear weapons are true, the deal favours Tehran’s unenumerated rights reading of the Non-Proliferation Treaty (NPT).

There are many questions the interim nuclear deal does not answer, such as research on weaponisation or other questionable facilities like Parchin. Critics will also point out that these safeguards hold true only for facilities discovered or declared and that Iran can continue a secret nuclear weapons project. This, however, would remain true even with full and unrestricted access – if a state really wants a bomb, the diffusion of technology makes it almost impossible to prevent proliferation. Nonetheless, through strict export controls and transparent facilities, it can be made extremely difficult. In any case, these issues, among others, are exactly what the second phase is for. As the saying goes, Rome was not built in a day.

Most importantly, the success of Geneva breaks the psychological indisposition to fruitful negotiations with Iran. If this agreement were to fail in six or twelve months, the P5+1 would have lost nothing; if it leads to further meaningful compromises, then everyone would have gained from this first step. Even those with misgivings about the NPT must concede that Iran has signed the treaty and all negotiations must be based on that fact; this is simply the price Iran has to pay for being party to the NPT. Could this deal have come earlier? Perhaps, but its time had not yet come.

[I have been asked by many what this interim deal means for India. My answer is, not much. India is an attractive trading partner for Iran presently because the sanctions have severely reduced the number of partners. Iran would, no doubt, like to have business relations with India, but if it had to prioritise where to spend its $7 billion in relief, Western markets would the first place Tehran goes shopping. Iran needs technology which India cannot provide, and it needs investment on a scale and at a pace that is inconceivable in the Indian political environment. As a result, Western, Russian, and Chinese markets would be Iran’s first choice.

Additionally, while many fantasise about the political space the Interim Nuclear Deal may open up for India (particularly in Chabahar), such imagination must also counter-balance desires with the fact that Delhi has always been singularly obstinate in not involving itself in the global security commons.

Does this agreement affect India’s relations with Pakistan? No. While the achievement of the interim nuclear agreement certainly does not lack in its power to inspire, the dynamics between Iran and the West are different from those between the subcontinent’s two nuclear rivals. The first relationship has a strong element of coercion – economic sanctions and the threat of military force, while the second relationship has neither the economic nor the military arm-twisting.

If the interim agreement lives up to its promise and delivers a comprehensive solution to the Iranian problem by the end of next year, it can certainly have a major impact on the region. The spillover will not only affect Syria, Israel, Palestine, Lebanon, and Saudi Arabia, but also India and Pakistan. The removal of sanctions on ties to Iranian petrochemicals, shipbuilding, infrastructure, insurance, and other sectors will allow Delhi to aggressively pursue, if it wishes, the full development of Chabahar port and related projects. This will have a significant impact on trade with Afghanistan and potentially alter the security dynamics in Central Asia. However, Indian firms will have to compete in an open market with other countries unlike the last few years. This is all, however, a very big ‘if’ based on what happens in the next six months.]

This post appeared on Daily News & Analysis on November 25, 2013.

India’s Nuclear Millstone

30 Mon Sep 2013

Posted by in India, Nuclear, South Asia

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The India-US nuclear deal ratified, amidst scandal, in 2008 gave great hope to the country’s hopelessly inadequate energy sector. For the deal to be operationalised, however, India needed to create a nuclear regulatory framework for security and safety as well as liability. Such a framework consists of ex ante and ex post components, neither of which can stand alone. Ex ante legislation concerns itself with strict regulatory mechanisms to improve safety of nuclear operations and hopefully prevent a nuclear incident, while ex post legislation deals with compensation in the rare case of an accident. Security has been addressed by the Atomic Energy Act (1962), while the compensation question was only recently considered and addressed in the Civil Liability for Nuclear Damage Act (CLNDA).

The CLNDA has succeeded in upsetting all sides involved – some are insulted by the paltry liability limit of ₹1,500 crores, while others insist that allowing nuclear power plant operators right of recourse against suppliers will hamstring a nascent industry. Both are right…sort of.

Presently, India’s CLNDA applies to nuclear installations owned and/or operated by the Government of India [Art. 1(4)]. This includes all of India’s fleet of reactors, but a larger role for the private sector in the future will have to see this clause modified. Furthermore, the operator is not liable for damages caused by acts of personal negligence, war, terrorism, or the gods [Art. 5]. As far as the victims of a nuclear accident are concerned, the operator is solely liable for all damages [Art. 4]. This means that victims need not prove fault, merely that an accident has happened, to receive compensation. It also channels all responsibility for compensation to one source, the operator, so the victim is not burdened by following up with many players.

So far, so good. However, Articles 6 and 7 of the CLNDA caps operator liability to varying amounts depending upon the facility at which an accident may take place – nuclear power reactors ₹1,500 crores, reprocessing plants ₹300 crores, and research reactors ₹100 crores. A Nuclear Liability Fund, set up by levying contributions from each operator – in this case, the government-owned Nuclear Power Corporation of India Limited (NPCIL) and Bhartiya Nabhikiya Vidyut Nigam Limited (BHAVINI) – will help defray liabilities beyond the operator caps, and the Central Government stands in as the guarantor of last resort up to a limit of 300 million Special Drawing Rights (SDR). The government has reserved the right to raise these limits at any point in the future.

The ₹1,500-crore cap on operator liability has been considered low by most experts. In the event of a Level 7 INES (International Nuclear Event Scale) nuclear accident, damages could easily reach into the billions of dollars. The cap is undoubtedly low, but it must be understood in its context. International experience has been that a higher limit is built gradually as the industry expands and the insurance asset base increases. Actuaries calculate insurance limits and premiums based on the number of people covered, frequency of claims, insurance pool, safety protocols, operating track record, and other factors. Unlike other industries, nuclear insurers have few customers – in India, the government is presently the only client, but even in countries with private nuclear utilities, the number is still small.

The US nuclear industry, regulated by the Price-Anderson Act, increased liability coverage from an initial $60 million operator liability and $500 million government guarantees to a liability pool of nearly $13 billion today that includes an operators’ indemnity above private insurance and no government coverage. In France, the limit was set at €91 million but is now being raised to €700 million; in the United Kingdom, the limit has been in a phased increase from about €150 million in 1994 to the present €1.2 billion; Sweden has also seen its operator liability cap increase from around €350 million to €700 million; in Canada, a 1976 limit of $75 million has been raised to $650 million in 2008.

Insurance companies will also hesitate to insure single reactor facilities because a serious accident would probably render the main source of income, the reactor, worthless. Insurers therefore prefer to pool the risk of all facilities to create a larger asset base and allow a greater coverage while simultaneously lowering the cost. Thus, a large nuclear industry presents a greater asset base and will allow for a higher liability limit. India presently has only 14 civilian reactors, making a small collective pool. By comparison, South Korea, approximately the size of Bihar, has 23 reactors. It is only with the growth of India’s nuclear industry that operator liability will rise to reflect the actual cost of damages.

It must be noted here that India signed the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2010, allowing it access to a supplement of 300 million SDRs for damages beyond the first tier operator liability. As per Article IX of the CSC, 50% of this shall be for damages within the installation state and the remaining 50% for damages without.

The second bugbear in the CLNDA is the GoI’s decision to allow the operator to have a right of recourse against the supplier. While the operator’s right of recourse against the supplier in case of i) the nuclear incident arising out of an act or omission by the supplier with an intent to cause damage or ii) a contractual right of recourse has been well-established in international law, Article 17(b) of India’s CLNDA extends the scope of such a right of recourse to consider “consequence[s] of an act of [the] supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services.” In addition, Article 46 states that the CLNDA provisions “shall be in addition to, and not in derogation of, any other law…and nothing contained herein shall exempt the operator.” This exposes the operator, and thereby the supplier, to additional proceedings under Indian law.

Sections 17(a) and (c) of the CLNDA are standard provisions under international law too, and can be compared directly with Article X of the Vienna Convention on Civil Liability for Nuclear Damage, Article 6(f) of the Paris Convention on Third Party Liability in the Field of Nuclear Energy, and even Article 10 of the Annex to the CSC. However, the expanded right of recourse against the supplier mentioned in Section 17(b) of the CLNDA has been objected to strenuously by international nuclear vendors on grounds that it violates international law and India’s treaty obligation to the CSC.

Supplier liability is an interesting notion that has been suggested in other countries too, with proponents arguing that exemptions are a hidden subsidy to nuclear vendors; given that the nuclear power industry has grown since the 1950s, it no longer needs such subsidies. This logic betrays a lack of understanding of nuclear economics – suppliers will pass on the additional costs of liability to the end consumer, the taxpayer, but the insurance industry will have to allocate funds to cover entities other than the operator. By making only the operator liable, the amount of coverage insurers can make available, via the operator, to the victims of a nuclear incident is maximum.

A second reason floated to pass liability on to suppliers is that there would be no incentive for them to improve their reactor designs otherwise. This is fear-mongering for two reasons: 1. regulatory requirements can force them to consistently improve on their designs, and 2. operators, cognisant of the liability they face, will veer towards safer designs and even a minor accident can affect the sales of a product line adversely.

The CLNDA has raised flags in France, Russia, and the United States, three of the world’s largest nuclear suppliers and important to India’s military and economic growth. While state-owned nuclear firms or firms with a large government stake such as Areva and Rosatom have expressed strong dissatisfaction with India’s liability law, private concerns such as General Electric and Westinghouse have declared that they would not enter the Indian market on such onerous terms. The impact of the CLNDA can already be seen – at Kudankulam, when India decided to retroactively apply liability to Russian-supplied reactors provided under a 1988 agreement, Moscow raised the price of the reactor, thereby passing the cost on to the consumer.

India’s leaders had arrogantly thought that the sheer size of their market would bring anyone to their doors; they have been proven horribly wrong. The nuclear renaissance everyone had expected from the Indo-US nuclear deal, even after five years, has not materialised. As a result, Delhi has started considering waivers to foreign companies or a curtailment of the duration of their liability to lure them to Indian shores. This will, in all likelihood, be found illegal by Indian courts. While a plain reading of Section 17 may suggest that clauses (a), (b), and (c) are distinctive and separate, they are interlinked. For example, if a contractual understanding between an operator and a supplier as per 17(a) can invalidate supplier liability in case of accident, can the same contract be extended to exonerate willful damage too? Furthermore, the Supreme Court of India (SCI) has declared in Krishna Bahadur v. Purna Theatre that a statutory right in favour of a party can be waived as long as no public interest or policy is adversely affected. In addition, Section 23 of the Indian Contract Act clearly stipulates that clauses of a contract would be unlawful if they go against the law or declared public policy. This was upheld by the SCI in Rattan Chand Hira Chand v. Askar Nawaz Jung in 1991.

Although Article 45 give the GoI discretionary powers to waive liability for some nuclear facilities, it stipulates that this power exists only in cases where the amount of nuclear material is insignificant.

In sum, the CLNDA appears to be a piece of legislation framed in the shadow of Bhopal than by pragmatism. The supplier liability clause and the vague additional torts clause will keep foreign vendors out of India – with the United Arab Emirates, Saudi Arabia, and China pushing hard on nuclear energy, India’s disorganised market, despite its size, is not a draw. These clauses do not make economic sense either; safety must be balanced by costs, probability and scale of accidents, and affordability – the reason everyone does not commute in tanks.

The liability limits are admittedly small, but these must be continually raised as India’s nuclear industry develops. It is unrealistic to expect the country’s insurance sector and nuclear industry to perform at European levels when they are half a century behind.

There is nothing stopping the GoI from setting an operator liability of ₹10,000 crores, but premia will be correspondingly high and nuclear power will become unaffordable. This is not something India can afford, environmentally or economically. Consider this: there are 115,000 premature deaths per year in India alone due to respiratory problems caused by coal, and there has been a shift for the worse in the climactic conditions over a startling 27% of the Indian landmass. The costs of myopia over the CLNDA are far greater than one realises.

This post appeared on Daily News & Analysis on October 05, 2013.