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A Bridge Too Far?

28 Wednesday Jun 2017

Posted by in India, Israel, Middle East, Nuclear, South Asia

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Perhaps the most substantial show of friendship India can make towards Israel is to offer cooperation in the field of nuclear energy. Some might argue that a complete disavowal of the Palestinian cause and close diplomatic alignment with Israel would be a greater commitment, especially given Jerusalem’s craving for international recognition and normalisation, but an alliance with a middle power who does not have veto power in the United Nations has too many limitations to be worth much. Nuclear cooperation, however, holds far more allure for two critical reasons: one, it has an immediately utilitarian dimension, and two, pace what some academics have argued about prestige, nuclear commerce is tightly controlled by an international cabal who have deemed Israel ineligible to receive nuclear material.

Yet what will nuclear cooperation with Israel look like? Is Israel even interested in nuclear energy? Can India conduct nuclear commerce with a country that is not a signatory to the Nuclear Non-Proliferation Treaty or have any sort of tacit acceptance such as the waiver India received from the Nuclear Suppliers Group? Will it invoke sanctions? What would be the ramifications for India? Is India capable of becoming a nuclear vendor? There are several questions that deserve careful thought before either country embarks upon such a venture.

Is Israel interested in nuclear energy?

Israel’s present installed electricity generating capacity is close to 17 GW, putting it in the same league as other OECD (Organisation for Economic Co-operation and Development) countries. If the country maintains an economic growth of five percent, energy requirements will rise to approximately 45 GW by 2050.

Israel’s policy of amimut – a Hebrew word meaning opacity – regarding its nuclear weapons programme has meant that it has shied away about discussing anything nuclear in public. However, calls for the country to invest in nuclear energy began in 1976 and continued throughout the 1980s. A site in the Negev desert at Shivta was reserved for a nuclear power plant with a generating capacity of 3,000 MW in 1980. Early in the new millennium, the became more frequent early in the new millennium. In February 2007, Uri Bin-Nun, an official at the Israeli Atomic Energy Commission, said that Director General Gideon Frank had told him that Israel was actively considering building a nuclear power plant in the Negev. Barely six months later, infrastructure minister Binyamin Ben Eliezer declared that building a nuclear power plant is a national priority and the proposal had the support of Prime Minister Ehud Olmert.

The tsunami at Fukushima also threw water on enthusiasm for nuclear energy in Israel. In an interview with CNN, Prime Minister Benjamin Netanyahu admitted that he was having second thoughts about nuclear power after Fukushima. However, Israel’s precarious energy situation meant that calls for nuclear energy would soon resurface. In 2015, the Ministry of Infrastructure raised the test balloon in a report that called for private sector participation in a nuclear energy programme. In an energy plan that forecast the doubling of Israel’s energy needs by 2030, the Ministry of Infrastructure suggested that at least 15 percent of Israel’s energy come from nuclear power by 2050.

Israel’s energy needs are not merely a matter of fuelling the economy – Jerusalem is very conscious of its energy security as well as the environment. After its diversification from coal to natural gas in the late 1990s, Israel discovered what would become the Mari-B gas field off the coast by Ashdod. Within a decade, natural gas became the country’s primary source of energy. Demand became so high that gas had to be imported from Egypt. However, the agreement had to be cancelled after seven years (2005-2012) due to political turmoil and terrorism and this experience underscored Israel’s vulnerability to Jerusalem. The discovery of the Tamar and Leviathan gas fields in 2009 and 2010 has given Israel a new lease of life, at least for the next 50 years, and plans are afoot to even begin exports to Europe; since January 2017, Israel began to quietly export gas to Jordan.

Israel also has no hydroelectric power to speak of, so it must rely entirely on fossil fuels, renewable energy, and nuclear power. Its move away from coal was partly due to environmental factors but also due to rising cost of imports; however, reliance on natural gas is still not quite environmentally friendly if Israel is to meet European emissions standards. More importantly, natural gas can serve as a reliable and valuable source of revenue if other energy sources can be found. Israel has invested in renewable energy and despite several remarkable startups in the sector, the government is not particularly enthusiastic about renewables due to its several shortcomings such as low efficiency, storage issues, water demands, land requirements, and grid stability. That leaves Israel with only nuclear energy.

Can India become a nuclear vendor to Israel?

At first glance, India seems a most unlikely nuclear partner for Israel. After all, how can a country which cannot sustain its own nuclear programme be of use to anyone else? It is true that the Indian Department of Atomic Energy has countless weaknesses but with a little political prodding, the DAE might just be able to assist Israel and in doing so revive its own domestic agenda. Despite its shortcomings, India does have the second-largest fleet of pressurised heavy water reactors in the world and decades of experience in building, operating, and maintaining them.

Globally, PHWRs are not the common choice for power generation; light water reactors have been preferred by the non-proliferation-minded governments of nuclear vendors. Yet with appropriate safeguards, this should not matter much to the international community which has experience in monitoring Canada’s 19 CANDU reactors of a technology similar to that which inspired Indian derivatives.

India’s reactors have the added benefit of being cheaper and smaller than the standard production models offered by Areva, General Electric, Rosatom, or Westinghouse. While these firms offer reactors with capacities between 1,000 and 1,650 MW, Indian models come at 220 MW, 540 MW, and 700 MW. The smaller size may suit Israeli needs better by allowing it to distribute reactors between three or four sites around the country. Admittedly, Israel may indeed prefer small modular reactors to even the diminutive Indian PHWRs but those models are yet to have a single working model even if Israel were eligible to purchase them.

It is not advisable to compare reactor costs across sites and technologies due to the dozens of variables that could change. However, as a rough illustration showcasing the viability of Indian nuclear exports, the two Russian 1,000 MW VVERs at Kudankulam III & IV cost India just short of ₹40,000 crores; by comparison, India’s 700 MW PHWRs at RAPS VII & VIII cost ₹12,300 crores and ₹11,500 crores at Kakrapar III & IV.

The biggest obstacle to India’s domestic nuclear manufacturing has been that no industrial house is willing to invest in the nuclear sector due to the paucity of orders. If India aggressively pursued nuclear energy for itself as well as for export purposes, it is a reasonable bet that there would be greater interest. India’s recent decision to approve ten more PHWRs for itself is a shot in the arm and if an order for 20 Israeli reactors over the next 30 years were to trickle in, it could reshape the industry.

There is also the issue of quality control. Indian manufacturers have had trouble producing nuclear grade turbines, instrumentation panels, and other equipment to an international standard. Cooperation with Israel need not be a one-way street – if Israeli know-how could augment Indian experience, these minor irritations might well disappear. This does require working with a level of openness the Indian establishment is not used to but it is a good measure to build character!

The biggest challenge to an Indian nuclear partnership will be its inability to provide full spectrum service. Delhi may be able to supply the reactors, manufacture fuel rods, train Israel to operate and maintain them, even buy back the used fuel to assuage proliferation concerns but it cannot guarantee a supply of uranium ore or yellow cake. India’s domestic production is shrouded in unwarranted secrecy but it relies on imports from Australia, Canada, Kazakhstan, and Russia. The only way for India to emerge as a full spectrum nuclear vendor is by acquiring uranium mines abroad. This would help with domestic use as well as export and is a sound option that Delhi has anyway been considering, regardless of whether India cooperates with Israel in the nuclear field.

Another option for India to break out of the commercial nuclear stranglehold it finds itself in is to prioritise its thorium reactor programme. India is a leader in this kind of advanced nuclear technology and it is blessed with mineral resources to last centuries. With a technology chain from mining to decommissioning entirely outside the influence of the NSG cartel, India has the ability to emerge as the Saudi Arabia of safe and clean energy. The benefits of such ambition are accrued not only domestically but also contribute towards global environmental health. India can assure Israel and its other clients of full-spectrum service in thorium energy if it ever proceeds with its development.

What are the geopolitics of Indo-Israeli nuclear cooperation?

This is the real question the proposal for Indo-Israeli nuclear cooperation boils down to. How will the international community react to the news? What will be their counter-moves? Can India and Israel bear the costs, if any? Are the benefits worth the price?

Legally, India stands in a unique space to offer Israel nuclear cooperation if it so desires. It is not a signatory to the Non-Proliferation Treaty nor is it a member of the Nuclear Suppliers Group, the primary cartel that restricts trade in nuclear technology, components, and fuel. Technically, Delhi breaks no laws by extending nuclear cooperation to Israel. Itself a non-signatory to the discriminatory NPT, India is perfectly placed to accept Israel’s refusal to accede to the treaty – albeit the reasons are somewhat different.

The primary concern for the international community, in principle, should be the diversion of civilian cooperation to military applications. To reassure the world, and because it is a better business practice, India can ask Israel to accede to safeguards under the International Atomic Energy Agency to those specific facilities India will be a partner in or offer a bilateral safeguards mechanism that follows the same protocols. The primary principle of non-proliferation reassured, the international community is but left with a sore nose at this circumvention of their net.

Used nuclear fuel is usually a concern for non-proliferation. India can buy back the used reactor fuel from Israel for use in its eventually coming fast breeder reactor programme. If the FBR programme shows promise, Israel might even be interested in recycling its used fuel with help from India. In a worst case situation, the fuel can be stored in an onsite facility until a suitable geological depository is found as is the case with all current nuclear power plants.

Will cooperation with Israel hurt India’s chances of furthering its own goals, such as getting into the NSG? Theoretically, perhaps. However, with China waiting to veto any mention of India and membership in the same breath, this really need not concern Delhi at all; its chances of getting into the nuclear cartel are as close to zero as one can get. The only way India might squeeze into the NSG is if Delhi is willing to let Pakistan off the hook and give it a clean chit for past transgressions. This is what “principles-based membership criteria” means and it is too high a price to even consider.

It is folly to even think that India is now a partial member of the nuclear community. Barring a handful of countries keen to do deals with it, the hurdles other countries place before Indian aspirations indicates that Delhi is resentfully seen as an interloper with powerful friends. India can expect further outrage from the non-proliferation community through at least these NSG members. Yet legally, India and Israel will have all their bases covered.

It may be tempting to compare Indo-Israeli nuclear cooperation to the Indo-US nuclear deal but it s not – neither India nor Israel are part of the non-proliferation architecture built around the NPT and NSG, freeing to engage in contracts of mutual benefit without restrictions. Regardless, the 2008 deal does establish a precedent and provide a structure for acceptable nuclear commerce outside the strict ambit of the non-proliferation regime. As with India, the non-proliferation community might decide that it is safer to have Israel’s reactors within the fold than without.

Much will depend on how the United States reacts, and as a close ally of Israel, Washington might be amenable to reason. India and Israel may also count on some assistance in lubricating the wheels of power in Washington through the influence of the famed Jewish diaspora. The deal, not a matter of identity or ideology, should not get caught in the internecine conflict in the American Jewish community. Israel has also been cultivating China, mainly for economic interests, who will have to choose between its relationship with Israel and its rivalry with India. The main opposition will likely come from the non-proliferation lobby, or nuclear ayatollahs, as Indian scholar Bharat Karnad has aptly named them.

Conclusion

Nuclear energy is not merely about a diversification of energy sources for Israel. World over, nuclear power plants have proven to have a multiplier effect on the local economy. The Shivta site, for example, would fit perfectly into Jerusalem’s other goal of developing the Negev. Additionally, nuclear power allows cheap desalination of large quantities of water from the waste heat generated by the reactors. A 15 percent share of total national energy creates a need for a fair number of reactors that can ease the pressure off Israel’s water supply. Tamil Nadu has operated desalination plants for over a decade from the waste heat of nuclear power stations in the state. Finally, a booming nuclear industry will also mean high-skilled employment opportunities for the population.

For India, nuclear cooperation will cement relations with an important strategic partner. It will also promote trade and strengthen the nuclear manufacturing sector by providing greater volume to make it lucrative for more players. A nuclear relationship with Israel would in effect set up a parallel nuclear commerce system to the NSG: if they wish to influence Indian policy, they must do so by letting India into the club.

Of course, all of this may be too soon for a country that has itself come in from the nuclear cold barely a decade ago. India, to paraphrase the immortal line of Lt. General Frederick Browning in the 1977 World War II classic, A Bridge Too Far, may be trying to go a bridge too far. People probably said the same thing about the Indo-US nuclear deal in 2005.

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The Hurdle to India’s Nuclear Renaissance

05 Wednesday Apr 2017

Posted by in India, Nuclear, South Asia

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Ambitious and well-intentioned as it may be, the department of atomic energy’s (DAE’s) recent proposal to build 12 nuclear reactors to boost power generation in the country needs to be taken with a pinch of salt. In recent decades, DAE has been long on promises and short on delivery—the proverbial white elephant.

Yet it was not always so. When India’s nuclear establishment got under way in 1944—theoretical research had been going on since the mid-1930s, in European labs as well as in India—Homi Bhabha charted out a road map for the country’s nuclear programme for the rest of the century. In a country with appalling literacy levels, unspeakable poverty and little by way modern infrastructure, nuclear power was a bold gamble. Over the next couple of decades, a pool of talent was created, expertise was developed, and collaboration with advanced states sought. Though progress was not breakneck, it was, nonetheless, impressive. Apsara, which went critical in 1956, was Asia’s first research reactor; India’s first power reactor, Tarapur, came online in 1969.

With the exception of an eight-year gap between 1972 and 1980, DAE has been commissioning a reactor every two or three years. However, the reactors were notorious for having a low plant load factor (PLF)—in other words, they were inefficient. The popular belief is that this is largely due to unreliable supplies of uranium fuel but wear and tear and system malfunctions are as much to blame.

Second, India’s pace of nuclear energy growth is dismally slow. When France and the US decided to embrace nuclear energy in the 1960s and 1970s, the former built approximately 60 reactors within two decades and the latter about 100 in a similar time span. China has, at present, as many reactors under construction as India has built since independence. After the end of India’s ostracism from international nuclear commerce, the government ambitiously announced an increase in India’s nuclear energy generation up to 63 GW by 2032; this was drastically revised downwards to 27.5 GW. Recent statements suggest that the target may have been lowered further.

The inordinate delays from conception to commission have been fatal for the sector. The nuclear project at Gorakhpur, for example, was sanctioned in 1984 but is yet to be built; the power project at Narora took 20 years from 1972-92 to complete; the first two units at Kaiga took 15 years. The fast breeder reactor project is also languishing, while DAE has been promising to begin construction on the advanced heavy water reactor next year since 2003.

Cost overruns have also been ingrained into the Indian nuclear process—the Narora plant was sanctioned for approximately Rs200 crore but ended up costing four times that amount; the first two units at Kakrapar saw a 350% increase in cost from conception to commission. Every Indian reactor has seen similar cost spikes.

Technology assimilation has also been a tough nut for DAE. India’s third commercial nuclear power reactor, the 220 MW pressurized heavy water reactor (PHWR) at Rawatbhata, was built with technology from Canada. Since then, Indian scientists have indigenized the design and scaled it up to 540 MW and 700 MW but haven’t been able to cross the 1,000 MW mark as Canada has long done. Today, India needs larger reactors for economies of scale but DAE is yet to deliver.

To be fair, not all of the blame can be placed at DAE’s door. The international nuclear industry, for example, has been in a depressed state for a while—Westinghouse’s financial woes and Areva’s problems with steel forging were self-inflicted disasters. DAE has also had to navigate around uninspired leaders who just could not see the transformative promise of nuclear power. That has resulted in budgetary restraints, poor policies and little encouragement.

However, the atomic energy establishment does not seem to have offered much resistance to the government’s apathy; ministries normally jostle for increased budgets, influence, limelight, a place in national strategy, or a seat at the table. In some ways, the apathy has suited DAE’s own lackadaisical work habits. And the shrivelled ambitions of its Nuclear Power Corp. of India Ltd, which is responsible for the construction and operation of nuclear power reactors, hasn’t helped matters either.

Notably, the atomic community was also divided over the India-US civil nuclear deal—despite the lack of indigenous achievement in the country. It also went soft on the stringent supplier liability laws introduced in 2010 that were not in keeping with international industry norms and effectively made the Indian nuclear market a no-go zone for both foreign and domestic suppliers. Furthermore, there has been strong opposition from the atomic community to privatization under the bogey of national security—a convenient shield—against calls for transparency.

Responsibility for DAE falls on the prime minister’s shoulders. It is no coincidence that DAE’s brightest years were under Jawaharlal Nehru and the agency has been languishing somewhat ever since. Curing this white elephant is an easy process—without even getting into long-term, sustainable goals such as privatization, clear regulation and transparency, closer scrutiny by the prime minister and an adoption of the sector as he has done with solar power would go a long way in revitalizing a moribund agency.

This post appeared on LiveMint on April 05, 2017.

India and the NSG

07 Tuesday Jun 2016

Posted by in India, Nuclear, South Asia

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The attention given to the upcoming plenary session of the Nuclear Suppliers Group is surprising, given that there is little chance of anything being accomplished. The biggest item on the agenda is, of course, the admission of India into the trading cartel, which is vehemently being opposed by China and perhaps also by Austria, Norway, Ireland, New Zealand, Switzerland, Mexico, and the Netherlands.

Anyone who thought that the matter would be closed with the ratification of the Indo-US nuclear deal in 2008 was only deluding themselves: though China sulked over the exception made for India to enter into the international civilian nuclear market, it is now extracting its pound of flesh by insisting on a uniform set of principles for membership to the NSG and advocating the admission of its client, Pakistan, to the group as well.

Beijing’s position, ostensibly, is that there should be clear criteria to join the 48-nation group of nuclear vendors. Exceptions should not be made for anyone, including India, because they inevitably weaken the entire nuclear non-proliferation regime. China also insists that all members of the NSG should be signatories of the nuclear Non-Proliferation Treaty.

On the surface of it, China’s stance may appear reasonable. In fact, Mark Hibbs of the Carnegie Endowment has raised some of the same issues in his thorough analysis of the prospect of expanded NSG membership. Hibbs suggests that the cartel carefully consider its membership policies for four reasons; of relevance to our discussion is the ambiguity created in the NSG’s non-proliferation mission by making an exception to allow nuclear trade with India in 2008.

Since 1992, the NSG has required that any non-nuclear weapons state wishing to purchase items on the group’s trigger list be a party to a full-scope safeguards agreement with the IAEA. The United States, in its support for India’s membership to the NSG, has advocated that India be made an exception to this rule. However, given India’s non-signatory status to the NPT, not to mention its nuclear weaponisation since 1998, several members of the NSG have felt that doing so would undermine the relationship between the NPT and the NSG. This relationship, though not enshrined in the guidelines, is implicit in the several factors considered for membership mentioned in INFCIRC/539 as well as the institution’s history.

States averse to Indian membership have argued that if a non-NPT state were to be given admission, there would have to be substantial benefits. Although rules-based membership seems fair, the NSG should nonetheless retain its flexibility in exceptional cases. A non-NPT state seeking NSG membership would have to demonstrate a good track record of non-proliferation, support international efforts towards the reduction and elimination of fissile material inventories, and not be an obstruction in the proceedings of the consensus-based group.

These principles must be taken with a generous pinch of salt: the international nuclear regime, in the half-century of its existence, has been marked by hypocrisy. The NPT reserved for five countries the right to nuclear weapons in perpetuity while extracting a promise from all others to abjure from them. Nuclear arsenals grew to the beat of exhortations to others to disarm; testing begat simulations and warheads were modernised even as perorations urged the international community to stop producing fissile material. The United States helped Israel acquire nuclear weapons and pointedly looked away as China helped Pakistan do the same in the 1980s. At the same time, European nations rushed to protect their firms who had been caught in conducting illicit nuclear trade from prosecution. There was not even a squeak from the nuclear controls regime when China announced in 2010 that it would grandfather the sale of two more reactors to Pakistan under a 2003 bilateral agreement – China had promised upon joining the NSG in 2004 that there would be no more sales. In 2013, Pakistan announced that two more reactors from China were under consideration.

Yet how well does India satisfy the NSG’s criteria for membership? Regarding the non-proliferation treaty, India reminded the NSG that accession to the NPT is not a criterion for membership – France was not a member of the NPT until 1992 though it was a founder member of the NSG in 1975.

On the second condition – a good non-proliferation record – India has a better history than even some of the NSG members. For that matter, equating the Indian and Pakistani applications for membership, as China has done, is, even by the NSG’s own standards, quite disingenuous. India has not sold nuclear technology to third parties and opened over half of its nuclear infrastructure to international inspections while Pakistan is infamous for its AQ Khan network that spread nuclear know-how from Pyongyang to Tripoli. Islamabad’s institutionalised use of terrorism as state policy adds to its instability and with the fastest growing nuclear arsenal in the world, it is a testament to the nuclear regime’s Janus-like trait that it is not under severe sanctions.

The NSG is also concerned that a new member might disrupt the proceedings of the group. Depending upon what one views as disruption, there might be some validity to this fear. It is unlikely that India will stand in the way of a Pakistani membership if it meets all the criteria for nuclear safety and security that have been laid out by the nuclear regime. It is, after all, in India’s interest that Pakistan’s nuclear establishment be as transparent and accessible to the international community as possible.

However, it is quite likely that Delhi object to clauses that excludes non-NPT countries as this will limit its own ability to engage in nuclear commerce and technical collaboration. If India is allowed into the NSG, the group will either have to amend the INFCIRC/254 (Part II here) that distinguishes nuclear weapons states from others for purposes of trade to create a hybrid category for India or insert India-specific language in every document the NSG produces. Ironically, this will help Pakistan as well by keeping the door open for non-NPT countries. While this may militate against the NSG’s values, it also underscores the cartel’s double standards.

The hostility to Indian membership is surprising for one more reason: in 2011, after the NSG plenary meeting in Noordwijk in the Netherlands, the group decided to tighten norms for enrichment and reprocessing equipment and technology exports. Among the several new criteria, one states that the country receiving such technology or equipment must be a member of the NPT. Given this partial reneging on the Indo-US nuclear deal, it leaves India only to purchase nuclear reactors and fuel. This, it already does without being a member of the NSG. Without any technical grounds remaining, is the opposition to India merely a matter of form, of style rather than substance?

Some analysts have argued that membership to the NSG is about status for Delhi, as its nuclear arsenal is about prestige. What they fail to explain is how the status of being a member of the NSG has helped some of its present members such as Belarus, Croatia, Cyprus, or Serbia.

India’s entry into the NSG is unlikely in the foreseeable future, not because Delhi has failed to live up to non-proliferation standards but because it throws a spanner into Beijing’s geopolitical calculations. If China were somehow persuaded to remove its veto on Indian accession, their price would be too high to be worth the trouble. India has tried to join the NSG by bringing its export controls and nuclear policies in line with the international norms; it has also tried directly lobbying the various member states and tried to use Washington’s influence where necessary. The only option available to it now is to create a parallel nuclear market by developing its own nuclear industry and stepping up exports.

India has had decades of experience building and operating pressurised heavy water reactors. Given their smaller size, they are also cheaper than other commercial designs available in the international market. Indian PHWRs would be an excellent option for economically less developed states or states just beginning to consider nuclear energy. In the future, India can also expand the menu to include its light water, fast breeder, or thorium reactors. If India can emerge as a major exporter to such markets, it would be in the NSG’s interests to bring India within the fold. Just as the potential of India’s nuclear energy market was a factor in persuading Washington of the benefits of bringing India into the world nuclear market, India as a nuclear vendor would have its own persuasive power.

Two obstacles prevent this course of action: the Indian nuclear industry is not yet capable of manufacturing to such scale, and India lacks the financial strength to offer the generous lines of credit nuclear vendors usually extend. The first of these can be resolved: the reason Indian industry has lagged behind is that there has been no interest in nuclear power in India. In seven decades of its nuclear programme, India has hardly built 21 reactors; as a comparison, France built nearly 60 reactors in 20 years and the United States 100 reactors in about the same time. Without a concerted effort to expand nuclear energy within the country, the economies of scale will not be created to persuade Indian industry to expand its capabilities in research, design, and manufacturing. If the private sector were allowed greater collaboration with India’s nuclear conclave, progress would be faster.

India cannot rely on its friends or the international community to ease this logjam. As the NSG operates by consensus, it would need the good will of each and every member of the group, including its rival, China. Even with US assistance, that looks unlikely. Instead, India must look to itself to create a situation that will bring the NSG knocking on its door. That vision and ambition is so far nowhere to be seen in Delhi.

This post appeared on FirstPost on June 09, 2016.