Wednesday, October 17, 2007

External impact of the nuclear deal getting cancelled

It's still too early to figure out what the full extent of the nuclear deal getting canceled is going to be, but the common consensus is that it is going to lead to a lowering of the country's credibility and status (although that would only be short term - the growth in the economy is still driving India's new found strength and attractiveness). So, while negotiating, the Indian side would have taken the position that such a deal does not need to be passed in Parliament, the Union Cabinet is empowered to approve such deals. In addition, the Indian Government had met with a number of other Governments that were on the Nuclear Suppliers Group (some of whom were Uranium exporters) in trying to work out potential contracts.
However, it was not just the Indian Government that went to bat for this deal. The Bush administration did a fair amount of pushing and using influence to move this deal forward, assisted by the Indian-American community that used its influence with Members of Congress (from both the Democratic and Republican side) and also pushed by many industries that would have benefited from such a opening up of the Indian civilian nuclear industry.
Another byproduct of the deal was the proposed relaxation of Uranium exporting conditions. Previously, India would not be able to get Uranium fuel from most of the major exporting nations because of the restrictions; under the new deal, the market had a much better chance of being open to India. Well, that does not seem likely now. Refer to this article:

With India virtually putting on hold its civilian nuclear deal with US, Australia has decided to review its plans to sell uranium to New Delhi.
Lowy Institute international security director Rory Medcalf said there was "no way" he could see Australia selling uranium to India "unless the US-India deal is finalised".

So, India is again going to be back on the restricted list for getting Uranium from outside, and with China in the race for buying a lot of the Uranium available for sale, India's nuclear program has to again depend on internal sources. Well, there's no getting away from the impact of moving away from the deal.

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posted by Ashish Agarwal @ 2:22 AM