Fact and fission

By: Kapil Sibal

February 13, 2015

A made-to-order “bonhomie” and “hype” were witnessed during US President Barack Obama’s recent visit to India. Many “breakthrough understandings” were talked about. The government claimed that Indo-US relations, allegedly static in the last few years, had acquired fresh momentum through the resolution of outstanding issues in the Indo-US civil nuclear deal.

R.K. Laxman passed away on January 26. Given the opportunity, Laxman’s “common man”, in his unique acerbic way, would have exposed the hype.

While in opposition, the BJP stalled every attempt by the UPA to seal the deal. L.K. Advani had alleged “this particular bill makes us a subservient partner in the deal”. He went on to say that the UPA was deluding the Indian people by saying, “we are trying to give energy security to the country by this deal” (Lok Sabha, 2008). Earlier, he had said, “It is doubly detrimental to India’s vital and long-term interests… we will renegotiate this deal to see that all the defective provisions in it are either deleted or this treaty is rejected completely” (Lok Sabha, 2007). Arun Shourie lamented, “We would become dependent on imported reactors and imported fuel… We are going to be dependent on the nuclear umbrella of the US even to survive in our own region” (Rajya Sabha, 2006). Yashwant Sinha and Sushma Swaraj, too, opposed the bill. UPA 1, despite the opposition, staked its longevity on it, with the CPM and allied parties withdrawing support. The bill was cleared and the ensuing breakthrough was historic.

In the course of negotiations, as the Civil Liability for Nuclear Damage Act, 2010, took its final shape, two problems arose. One had to do with the liability of suppliers, the other with the liability of the operator. Since the UPA government did not enjoy a majority in the Rajya Sabha, it had to submit to impositions by the Opposition. The BJP insisted that the international liability norms concerning suppliers were unacceptable, that in the event of an incident like Fukushima, suppliers would escape both civil and criminal liability. The tragic experience of the Bhopal gas leak provided the rationale for an emotive argument.

Section 46 of the 2010 Act states: “that the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt the operator from any proceeding which might, apart from this Act, be instituted against such operator”. This meant that the liability of the supplier is unlimited in the event of a tort claim for damages. Another provision in Section 17(b) entitled the operator to the right of recourse against the supplier or his employee, inter alia, for a nuclear incident, for patent or latent defects, sub-standard supplies, services, equipment or material.

The BJP was aware that such provisions would dampen the prospects of supply of nuclear reactors and technology from entities in the US and France. Because of our strong ties with Russia, we were hoping that we could persuade them to do business with us despite the unlimited liability clause. These provisions proved to be problematic. Now, the BJP is seeking to correct its monumental error by negotiating around the legislative impasse for which they were responsible. The inclusion of Section 46 and Section 17(b) was the result of a mindset in which the national interest was made subservient to the BJP’s partisan politics.

Yet no negotiations or assurances can override Sections 46 and 17(b). The government is not forthcoming when questioned about the details leading to the alleged “breakthrough understanding”. The little that we know may be analysed as follows. One, the alleged understanding seeks to establish an insurance pool which will protect nuclear operators and suppliers to the extent of $250 million in damages. Two, a legal memorandum will be drawn up to comfort suppliers that the Indian liability law is consistent with international norms. Three, a new system of reporting on the status of nuclear fuel and other material supplied by the US.

There is no document executed by the two governments that reflects the above. What we perhaps have is a way forward without reference to either the legality or acceptability of the claimed breakthrough. No understanding can override the specific provisions of the Nuclear Liability Act and provide comfort to nuclear suppliers. The BJP, by insisting on the specific language of Section 46 and 17(b), had effectively stalled companies like Toshiba, Westinghouse Electric and GE Hitachi Nuclear Energy from selling materials or building nuclear power plants in India.

On the issue of creating an insurance pool to cover $250 million in damages in the event of a nuclear incident, the government of India is alleged to have committed to a cover of an additional $200 million, apart from aligning itself with the Vienna convention on supplementary compensation. The damage from Fukushima amounted to about $200 billion. How would the insurance pool and the additional cover of $200 million secure the concerns of suppliers for damages? Leaders may seek political mileage through hype, calling such an arrangement a breakthrough. But the stark reality is that the investment will only come when GE or Westinghouse considers this arrangement acceptable. As long as Section 46 and Section 17(b) continue to be part of the Act of 2010, both GE and Westinghouse will be exposed to unlimited liability. No matter what Prime Minister Narendra Modi says, India’s liability laws cannot be overturned or jettisoned by government memorandum and soundbites on television. The attorney general’s opinion, in the form of a legal memorandum, cannot amend the statute; it must be consistent with the statute. To claim any understanding in the manner suggested is to fool the people of India. Modi has attempted to do it in the past and he may attempt to do it in future. But investors cannot be fooled.

The third issue is the requirement to provide information about the form, amount and location of any uranium supplied, to make sure that it is not diverted for military use. It is a requirement under the Hyde Act of 2006. That is a problem that Obama will have to resolve with the US Congress. That is the least of the problems. Obama or his successor may well persuade Congress to accept tracking of information through the International Atomic Energy Agency and seek comfort therein.

The BJP today has managed to do yet another U-turn. Instead of renegotiating, it now lauds the deal. It wishes to cure the hurdle it was responsible for. Now it is congratulating itself for providing a solution which is not in sight. And the media looks the other way.

The writer, a senior Congress leader, is a former Union minister.