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US−India 'breakthrough' met with scepticism

Nuclear Monitor Issue: 

Claims in late January from US President Barack Obama and Indian Prime Minister Narendra Modi that they had reached an agreement on accident liability arrangements have been met with scepticism.

In a detailed analysis posted on the website of the (Indian) Institute for Defence Studies and Analysis, G. Balachandran writes:

"In a sort of official statement, US Ambassador to India Richard Verma was reported in the media to have said – although the US Embassy refused to either clarify or deny his having ever made such a statement – that the liability issue was to be resolved through a "memorandum of law within the Indian system" that would not require a change of the Indian law. Later on, the spokesperson of the Indian Ministry of External affairs clarified the situation by the mere statement that "We will indeed be providing you that information and that will be copious in nature, it will answer all your questions." This was done ... in a Frequently Asked Questions (FAQ) format, although this still leaves many questions unanswered. For instance, it does not answer how the understanding between the two sides will be formalised. On the contrary, the FAQ answers raise further questions that need to be answered. Obviously, a FAQ will not carry much weight in business decisions that have to be made in respect of nuclear transfers."1

Pro-nuclear commentator Dan Yurman said:

"There is no signed piece of paper, joint communique, or treaty between the US and India that says US nuclear firms, including Westinghouse and GE Hitachi, will now be exempt from the provisions of a nuclear liability law enacted with the support of the BJP, the political party that swept PM Nodi into office. ... No one on the US side is buying it. Spokesmen for both Westinghouse and GE Hitachi were noncommittal in response to questions from the news media about the so-called "breakthrough" deal and the insurance pool. At best their responses have been lukewarm."2

Washington Post reporters Annie Gowen and Steven Mufson wrote:

"We've been characterizing it as a breakthrough or breakthrough understanding," said a senior U.S. administration official on Tuesday. But, the official said, "It is not a signed piece of paper but a process that led us to a better understanding of how we might move forward. ..."

The key issue will be whether the conflict between international law and Indian law can be waved away by a memorandum from India's attorney general. The memorandum would have to say that the 2010 liability law "doesn't mean what it says," said a Washington lawyer familiar with the issues but who asked for anonymity to protect his professional relationships. "The fear is that the U.S. government will say this is good enough," the lawyer added. "Even if the [Indian] attorney general comes out with a memorandum saying the law doesn't apply to suppliers, that's not binding on Indian courts."3

The Associated Press reported:

"India and America's declaration of a breakthrough in contentious nuclear energy cooperation has been met with a lukewarm response from industry and analysts. Few expect the potentially lucrative Indian market to suddenly become less complicated for U.S. nuclear companies."4

Other obstacles remain in addition to the liability issue, as energy and nuclear policy consultant Mycle Schneider told Deutsche Welle:

"In reality, there is no real market for foreign nuclear companies in India, unless they bring their own funding. Under free market conditions it is not possible anymore to build a nuclear power plant anywhere in the world. So if new reactors are built in India or elsewhere, the projects are highly subsidized, either by the government − the taxpayer − or the ratepayer."5

Schneider is a nuclear critic but his views on nuclear economics can also be found in the industry literature. World Nuclear News recently ran an article by Edward Kee from the Nuclear Economics Consulting Group, who notes that of the 69 reactors under construction around the world, only one is in a liberalized electricity market.6


1. G. Balachandran, 10 Feb 2015, 'Some issues in respect of Indian's nuclear liability law',
2. Dan Yurman, 8 Feb 2015, 'India's Nuclear Deal; Good for Diplomats; Bad for US Nuclear Firms',
3. Annie Gowen and Steven Mufson, 4 Feb 2015, 'Is the India nuclear agreement really the 'breakthrough' Obama promised?',
4. Associated Press, 27 Jan 2015, India nuke deals still thorny for US despite 'breakthrough'
5. 28 Jan 2015, Breakthrough in US-India civil nuclear deal 'more symbolism than reality',
6. WNN, 4 Feb 2015, 'Can nuclear succeed in liberalized power markets?',