Amid hugs, Modi and Obama hammer out deal on nukes—and scold Pakistan

Image: Reuters/Adnan Abidi
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Between two burly hugs—and backed by a political mandate that his predecessor so keenly missed—prime minister Narendra Modi on Sunday (Jan. 25) pushed the India-US relationship into an orbit that would’ve been scarcely imaginable even a few months ago.

On a day rife with symbolism and much-touted personal chemistry, Modi and US president Barack Obama announced that key hurdles to a landmark nuclear deal signed by former prime minister Manmohan Singh seven years ago had been removed.

And if that by itself weren’t significant enough, the two leaders outlined areas of cooperation that could have massive geopolitical consequences, at home and abroad.

Here are the four takeaways.

1. Reactors are coming

Modi, speaking first at the joint press conference on Sunday afternoon, announced the breakthrough:

The Civil Nuclear Agreement was the centerpiece of our transformed relationship, which demonstrated new trust.  It also created new economic opportunities and expanded our option for clean energy. In the course of the past four months, we have worked with a sense of purpose to move it forward.

In his statement, Obama added:

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.

And with that, a nuclear deal that former Indian prime minister Singh and US president George W. Bush had conceived almost a decade ago (a cooperation agreement under section 123 of the United States Atomic Energy Act of 1954) finally moved towards fruition.

“We have a deal,” Amandeep Singh Gill, the Indian foreign ministry’s joint secretary for disarmament and international security affairs, said in a press conference. “We have reached an understanding on civil nuclear liability and finalized the text on the administrative agreement to implement the 123 Agreement.”

Incidentally, it was Modi’s own party—the Bharatiya Janata Party, then on the opposition benches—that protested against the nuclear deal between 2006 and 2010. Sushma Swaraj, India’s foreign minister, had then reportedly called the nuclear agreement a “big blunder.”

The US-India nuclear deal was signed in 2008, but held up on two fronts.

The liability issue

First, the Indian government had passed a law—The Civil Liability for the Nuclear Damages Act, 2010—that allowed an operator to recover damages from suppliers up to Rs1500 crore ($245 million) in case of an accident. The operator, of course, had to prove that the incident occurred due to substandard equipments or material defects, but the US did not accept the proposal.

According to international norms, only the operator—in this case the Nuclear Power Corporation of India (NPCIL)—was to be held responsible, but the Indian government wanted suppliers also to be included.

Now, both governments have reached a “general bilateral understanding,” India’s foreign secretary Sujatha Singh said, with an agreement to form an insurance pool to cover the financial risk of such an accident.

“What would be called the India nuclear insurance pool is a risk transfer mechanism which is being formed by GIC RE (General Insurance Corporation of India) and four other public sector undertakings in the general insurance business in India,” Gill said. “These companies would together contribute Rs750 crore ($122 million) to the pool, and the balance capacity would be contributed by the government on a tapering basis.”

The remaining details, he added, are being “worked out.”

The traceability question

Second, the US reportedly wanted to track all the nuclear materials they supplied to India, to ensure that Delhi could not use them for military purposes. That demand now seems to have been withdrawn—and the administrative agreement to operationalize the nuclear deal has been firmed up.

The administrative arrangements text “conforms to our bilateral legal arrangements, as well as our practice on IAEA safeguards,” secretary Singh said.

2. Defence cooperation

As the world’s largest arms buyer, India is one of the most important markets for America’s defense industry—and it is a relationship that has thrived in recent years.

In 2014, the US became India’s largest arms supplier, breaking a decades-long Russian stranglehold over the sector. Simultaneously, New Delhi also became the US’s biggest arms buyer, unseating the Saudis.

But both realize that merely buying and selling isn’t enough, which is why Obama and Modi are now pushing for the co-development and co-production of defence equipment in India.

“Today, we have also decided to take our growing defense cooperation to a new level,” Modi said. “We have agreed, in principle, to pursue co-development and co-production of specific advanced defense projects… These will help upgrade our domestic defense industry; and expand the manufacturing sector in India. We will also explore cooperation in other areas of advanced defense technologies.”

Under the Defence Technology and Trade Initiative (DTTI), India and the US have agreed to jointly explore four projects:

The two countries will also see if they can collaborate on aircraft carrier and jet engine technology.

3. Pacific partnership

For some time now, President Obama has spoken of America’s “Pivot to Asia,” as he looks to realign the country’s diplomatic and military focus to the Asia Pacific region.

India has been seen as a key part of this strategy, particularly as a counter to China’s rise, even as prime minister Modi has sought to increase New Delhi’s economic engagement with Beijing.

Modi, in his statement, explained:

President Obama and I had an excellent discussion on global and regional issues. In particular, we renewed our commitment to deepen our cooperation to advance peace, stability, prosperity in Asia, Pacific and Indian Ocean Region, which is critical for the future of our two countries and the destiny of this world.

Obama was more pithy:

We’ve also agreed to a new vision for the Asia Pacific so that we’re doing more together to advance our shared security and prosperity in this critical region.

4. Tackling Pakistan

Countering terrorism has been at the heart of the conversation between India and the US, given Pakistan’s continued belligerence and the American withdrawal from Afghanistan.

While both leaders refrained from naming Pakistan in their individual statements at the press conference, the joint statement issued by India and the US was more direct in referring to Pakistani groups, including those responsible for the 2008 attacks on several locations in Mumbai:

The Leaders reaffirmed the need for joint and concerted efforts to disrupt entities such as Lashkar-e-Tayyiba, Jaish-e-Mohammad, D Company and the Haqqani Network, and agreed to continue ongoing efforts through the Homeland Security Dialogue as well as the next round of the U.S.-India Joint Working Group on Counter Terrorism in late 2015 to develop actionable elements of bilateral engagement. The two sides noted the recent U.S. sanctions against three D Company affiliates.

The President and the Prime Minister further agreed to continue to work toward an agreement to share information on known and suspected terrorists. They also agreed to enter discussions to deepen collaboration on UN terrorist designations, and reiterated their call for Pakistan to bring the perpetrators of the November 2008 terrorist attack in Mumbai to justice.

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