Business Lobby Triumphs in U.S.-India Nuclear Deal

[Editor's Note: This essay is part of a series of Audits of the Conventional Wisdom, a project of the Center for International Studies at MIT.]

Much has been written and spoken about the U.S.-India nuclear agreement since Prime Minster Manmohan Singh and President George W. Bush unveiled it on July 18, 2005, in Washington, D.C. Since then, the U.S. Congress has virtually set aside its much touted concerns about proliferation of nuclear weapons and is nearly ready to approve the amendments to the 1954 Atomic Energy Act that will be necessary for the deal to be consummated. It appears that instead of scrutinizing the deal through the lens of energy and proliferation concerns, the focus of business interests has prevailed.

South Asia has come a long way since the days of SEATO and CENTO -- the U.S.- sponsored pacts to contain China and keep India under check. Gone are the days when the Seventh Fleet flexed its muscle on the Bay of Bengal in support of a beleaguered Pakistan in its military campaign against the "mukti bahini" -- the freedom fighters in erstwhile East Pakistan, now Bangladesh. Once the leader of the non-aligned, the Indian government has not expressed even a whimper of protest about what has been happening to Iraq, Lebanon, or Gaza. India and the United States now are "natural allies," apparently forged primarily by mutual economic interests. But there was the China factor as well.

Although left unsaid, China entered into the calculation of both India and the United States. The Bush administration is careful not to revive the notion of the Cold War policy of containing China, but many in the Congress are not so reticent. At the same time, the Indian government is equally careful to highlight the growing normalization of relations and the growing trade ties with Beijing. But the clamor in the security community in New Delhi is all about countering China -- a topic I heard repeatedly during my recent visit to the region. So its importance cannot be discounted. But the economic incentives of the deal have not earned as much scrutiny, a major oversight in the public discourse.

Selling The Deal

The deal allows India to keep its nuclear weapons and to attain, in effect, the status of a nuclear weapons state without calling it as such. India remains a non-signatory of the Nuclear Non-Proliferation Treaty (NPT). The recent agreement includes a U.S. commitment to adjust international regimes to enable full civil nuclear energy and trade with India and, specifically, resumption of supply of fuel to the reactors at Tarapur. India would separate its civilian facilities from military ones and put them under international safeguards, would continue its nuclear-weapons testing moratorium, and would refrain from transferring enrichment and reprocessing technologies to states that do not have them.

The Bush administration has promoted the deal as a great leap forward toward building a strategic relationship with India. The business case was made as follows. The United States wanted to help India become a world power. To achieve that status, India's current economic growth -- which has been running at about 7 percent for the past few years -- has to be sustained, and the key enabler was plentiful energy. The Congress Party-led government of the United Progressive Alliance (UPA) secretly negotiated the agreement with the U.S. government. Neither the Indian Parliament nor the U.S. Congress was aware of the deal until it was announced. In fact, the initial opposition in America was mainly about a Republican president ignoring his party's congressional leaders on such an important matter. However, the leadership was mollified soon enough after the administration offered assurances about future cooperation.