June 30, 2016
The inside story of India's audacious bid for membership of the Nuclear Suppliers Group and how China's sustained opposition thwarted it for now. Despite the setback, Modi's team remains confident of getting in.
On June 27, at a quiet ceremony in New Delhi, Foreign Secretary S. Jaishankar signed India's accession to the Missile Technology Control Regime (MTCR), making it the 35th member of this exclusive club. It was a triumph of sorts because the Regime was set up in 1987 to prevent India and other aspiring countries from acquiring the critical technology and material required to build nuclear-tipped missiles. What made India's entry special was that China, despite several attempts, has still not been admitted as a member.
Yet even as the diplomatic and scientific community in India rejoiced at the achievement, their celebrations and those of the Indian government were muted due to India's recently rebuffed bid to become a member of another technology restraint regime, the Nuclear Suppliers Group (NSG). The NSG, a grouping of 48 members, was formed in the wake of India's first nuclear test in 1974 and put in place a rigid set of rules that prevented its members from engaging in nuclear trade with those who did not adhere to the Nuclear Non-Proliferation Treaty (NPT).
Just the previous week, at the annual NSG plenary meeting in Seoul from June 20-24, India fought a bruising battle to be admitted as a member after it had put in a formal application in May this year. But China, which was admitted as an NSG member only in 2004, spearheaded a campaign that stalled the consensus India was hoping to build. Though member nations can continue to trade with India, because of the special waiver the NSG granted in 2008 as part of the landmark Indo-US civilian nuclear deal, there was little doubt that the outcome of Seoul was a diplomatic slap to India's efforts.
The Opposition parties were quick to castigate Prime Minister Narendra Modi for his "ill-timed" high-decibel diplomatic folly. Congress vice-president Rahul Gandhi tweeted, "NSG: How to lose a negotiation by Narendra Modi #FailedModiDiplomacy." Even academicians and former diplomats questioned the need for pushing for NSG membership when India had already been granted a waiver. The big questions remained: Why did India push for a full NSG membership? Did the Modi government handle the naysayers, particularly China, well? Can India recover ground and push for early admission to the NSG? india today spoke to key officials involved in the NSG campaign and the inside story reveals it was not the diplomatic debacle it has been painted as but a carefully calibrated and audacious bid. Here is why.
SHOULD INDIA HAVE PUSHED FOR NSG MEMBERSHIP?
Among the major criticisms levelled was that with India already getting a NSG waiver, there was no need to push so hard for what was being described as "second class membership" which didn't give it any new privileges. Satyabrata Pal, a seasoned former diplomat, wrote in The Hindu: "This tilting at the windmills of the NSG is manic, but it's not diplomacy, it's folly."
Pal's well-argued piece ignores several imperatives that India faced in its NSG membership quest. When Modi took over as prime minister in May 2014, despite the outstanding achievement of the Manmohan Singh government in ending India's pariah status in nuclear commerce, there was plenty of unfinished business. Overruling objections his party had about the Indo-US nuclear deal, Modi went about implementing the commitments and provisions with extraordinary commitment and zeal, and needs to be commended for his bipartisan approach.
Top among the priorities was to speed up India's bid to become a member of all the key restraint regimes, including the NSG, that had been put in place to slow down or block India's efforts to develop a defence against weapons of mass destruction. In November 2010, US President Barack Obama had promised Manmohan Singh that the US would work towards making India a full member of the NSG apart from the other three restraining regimes: the MTCR, the Australia Group (to control the spread of chemical and biological weapons) and the Wassenaar Arrangement (export controls for dual use goods and technologies).
Modi's team found that while the Manmohan Singh government had worked towards becoming a member of all the four restraint regimes from 2011 onwards, its efforts had been bogged down for various reasons. As a senior MEA official said, "It was a policy choice then, but we took on more than we could chew. All four regimes required particular administrative and legal measures, fulfilling which required a humongous effort among several ministries. As a result it became almost mission impossible."
So rather than pursue all four at the same time, Modi's team decided to prioritise their moves, putting the NSG and MTCR membership at the top of the list. On NSG, among their concerns was that while in 2008 the UPA-I government had claimed that the NSG had given it a "clean waiver", that status was altered three years later when UPA-II was in power. In 2011, the NSG revised and updated its guidelines for all members to prohibit trade in enrichment and reprocessing technology with any country that had not signed the NPT. Since India had refused to sign the NPT since its inception in 1968, calling it "unfair and discriminatory", the amendment was clearly targeted at Delhi.
After India protested, the US, Russia and France issued statements that they stood by their agreements to provide India "full nuclear fuel cycle" cooperation irrespective of the NSG guidelines. But as an official points out, "It should have been a wake-up call for the then policymakers that the NSG could alter its rules and we would be forced to adhere to it. It was imperative that we move into the living room where decisions were being made rather than wait in the verandah and be told what we can or cannot do."
WHY COULDN'T THE UPA-II DO IT?
Modi was advised to pull out all stops to get NSG membership. For that, Obama had to fulfil his commitment and get the US administration to do the heavy lifting as they did in 2008. Given the preoccupations of the UPA-II in the final years of its reign, Indo-US relations had experienced a drift. Shedding any personal hurt he harboured against the US for denying him a visa since the 2002 Gujarat riots, Modi brought the mojo back into Indo-US relations by quickly establishing a personal rapport with Obama in his first meeting with him in September 2014. Modi hardsold his regime as more open to do business with. American companies told him that they had hoped that after the Indo-US nuclear deal they could sell nuclear plants to India, making the deal a win-win for both countries. But their efforts were stymied because of the problems posed by the new Indian nuclear liability law that was passed by Parliament in 2010.
When he returned from the US, Modi convened a team of the external affairs, finance and law ministries to overcome the problem. India's new liability law had put the onus of any failure of a nuclear plant on the manufacturers, including payment of heavy compensation. The US saw red, as did Russia and France, who were also negotiating to set up new nuclear power reactors in India. They pointed out that it didn't conform to existing international norms on liability. Even private domestic nuclear plant manufacturers were dissuaded by the new law. So Modi's team worked to find a way to overcome the vexatious liability clause without amending the law. The government did that by setting up a special Indian Nuclear Insurance Pool of Rs 1,500 crore in July 2015 that took care of the liability concerns of both foreign and domestic nuclear plant suppliers.
There were two other issues with the US that Modi addressed. Under the Indo-US nuclear deal, India had agreed to designate civilian and military nuclear power plants and put the civilian ones under safeguards. In December 2014, India complied by putting the two remaining civilian plants that had been identified under IAEA safeguards. Then to demonstrate proof of its commitment to non-proliferation in January 2015, India joined an expert group to discuss how to move the stalled UN-sponsored Fissile Material Cut-off Treaty (FMCT) negotiations in Geneva forward.
WHY THE URGENCY TO GET NSG MEMBERSHIP NOW?
"It was not a summer madness," as a senior MEA official put it. The quest for NSG membership became urgent because of two major but unrelated reasons: the Paris climate change summit and the fact that Obama's presidency would end in December 2016. At the climate change summit in November 2015, India was initially regarded as the problem as it was refusing to commit to reduction in its reliance on fossil fuel like coal for energy. Modi boldly turned the tables and made India a part of the solution. Instead of dragging his feet, Modi proactively committed that by 2030, India would raise the share of clean energy from non-fossil fuels to 40 per cent of the total. He then outlined an international solar alliance to evolve cheaper and more efficient technology to harness solar energy.
Yet more than solar energy, Modi and his team were calculating that the massive increase in nuclear power would enable India to meet the targets. Nuclear power now generates around 6,000 MW and constitutes only three per cent of India's total power. Modi had outlined an aggressive plan to ramp up nuclear power generation to 63,000 MW by 2032, pushing its share of the total to 9 per cent. So apart from sanctioning 16 new domestic power plants that would generate an additional 10,600 MW, the Modi government planned to enter into tie-ups with foreign companies from the US, Russia and France for 26 new power plants that would generate 29,500 MW.
To fulfil such an ambitious target, both Indian and foreign companies needed finance and technological tie-ups. For that, international investors required stability in policy as well as to ensure that there was no change in the rules of the game. Large players in the nuclear business like Europe, Korea and Japan said they would be more comfortable if India became a member-it would be easier to make investment commitments. Membership of the NSG had become a necessity for India. "NSG membership was like the triple AAA rating for investors", as an official put it. Also, by linking its climate change goals to NSG membership, India was putting additional pressure on major countries to push its case.
Meanwhile, Indian policymakers watched with increasing concern, the race for the next US presidency. Against all odds, the maverick Donald Trump, with his bellicose statements and charges against all and sundry, was gaining ground and would go on to win the Republican nomination. Meanwhile, Hillary Clinton struggled to beat her rival Bernie Sanders for the Democrats' nomination. All this added to India's uncertainty. Rather than wait for the next president, Modi and his team decided they should push through India's bid this year itself while Obama was still at the helm. After all, he had promised to secure India's NSG membership. "In a way, we had no choice, events forced the timing-we had to go the NSG plenary in June," says an official.
DID INDIA DO ITS HOMEWORK BEFORE APPLYING?
In October 2015, when Ambassador Rafael Marianno Grossi of Argentina, then chair of NSG, came for his annual review, India sought his advice on how best to apply for membership. Grossi advised that before making a formal application they should talk to members and check out the concerns they may raise and then make a formal presentation to them about how India was addressing the issues they raised.
In April this year, when the NSG Consultation Group was to meet in Vienna, India wrote a letter to all members requesting that it be permitted to make a presentation. When the NSG met, China stiffly opposed such a move, stating, there is "no consensus on India's membership, so no presentation." An Indian official present described it as a "Catch 22 situation-we can't start the process till we have a consensus, and we can't work for a consensus till we have a process". However, Australia bypassed the Chinese protest by hosting an event on the margins and India presented its case.
Jaishankar after signing India's accession to the MTCR in Delhi on June 27. Photo: PTI
When the MEA team returned to Delhi, they did a reality check as to where the 48 members stood. In their assessment they had 24 yea-sayers, while many others were either quiet or wanted some criteria for membership. Only a handful appeared opposed to the idea. If India's bid had to be taken seriously, it needed more than just a simple majority. Decisions in the NSG are taken by consensus and even one dissenting member could block a resolution. So the MEA deployed secretary-level officers as envoys to go and brief all the NSG members.
It was also decided that Sushma Swaraj, the Union minister for external affairs, and the prime minister would be requested to speak to select ministers and heads of state. By the end of the process, Swaraj had personally called her counterparts in 26 countries. And the prime minister had spoken to 12 heads of states in addition to making it a point to include in his travel plans countries like Ireland, Switzerland and Mexico where he made a personal request to back India's NSG bid. Answering criticism as to why Modi had raised the pitch, an official defended his action, saying, "It is unfair to say the PM was making a huge show for publicity-in his mind he was willing to go the extra distance for the good of the country."
On May 10, Jaishankar formally presented to Grossi, the NSG chair, India's 300-page application seeking admission into the NSG and requested that it be considered at the annual plenary meeting to be held in Seoul from June 20-24. A fortnight later, Pakistan also put in a formal application for admission into the NSG. It was evident that Pakistan had China's backing. But as compared to India, Pakistan had no credentials to show that it was a responsible member of the nuclear fraternity. Its top nuclear scientist, A.Q. Khan, had been charged with selling nuclear secrets to North Korea and Iran. Unlike India, it had not separated its civilian reactors from military ones or adhered to various key protocols the IAEA had mandated. Pakistan's application to the NSG was seen by the rest of the members as China's effort to either block India's chances or to push Pakistan through by hyphenating it with India's application. India knew it had a big fight on its hands.
WHY 2016 WAS DIFFERENT FROM THE 2008 NSG SUCCESS?
The Modi government has been criticised for the "ham-handed" way it handled the NSG membership bid, and it is now being contrasted with the way Manmohan Singh and his team went about "quietly" winning support. It is not as if there was no hype or hoopla around the UPA-I bid to secure a waiver. There was stiff opposition from the coalition partners that finally saw the Left break away, accusing the prime minister of being a pawn of the US.
China had opposed India then too but not as overtly as it is doing now. In 2008, China told India privately that it would not oppose India's waiver if India got the support of all the other members. What tilted the balance was when George Bush called up Hu Jintao and requested him to back India. The Chinese smarted at the call but went along with the consensus.
What has changed since 2008 for China? China in 2016, for one, is a vastly different beast. Since taking over from Hu in 2013, Xi Jinping has outlined a far more robust foreign policy. Gone is the caution that defined the Hu era. This is most evident in China's ties with the US. A central theme of Xi's diplomacy is "building a new type of great power relations" with the US, which implies, even if not explicitly, that China now sees both countries as equals in a league of their own. Beijing is ready to stand up to the US in ways it wasn't quite prepared to do earlier, and the US no longer has the leverage with China it once had-a transformation Delhi needed to appreciate.
For many in China, the pressure from Washington in 2008 to allow the exception for India at the NSG still rankles. "For the waiver in 2008, the US worked very hard and finally succeeded in getting India treated as an exceptional case. Would that work today? I am not sure," Zhao Gancheng, a senior strategic expert and director of South Asia Studies at the Shanghai Institute for International Studies, told india today. The Indian team was conscious of the new international realities and in 2016 did a lot of the heavy lifting by itself rather than as one official put it, "outsourcing it to America". Also, they were aware that they had to confront a far more aggressive China which if still not able to shape the international order was strong enough to be what an expert called "a blocking power".
The other big shift in China's diplomacy is that Beijing appears to have gone all-in when it comes to its "all-weather" ally, Pakistan. Gone is the attempt-or pretence, some would argue-of seeking a balance in ties with India. In Beijing, Pakistan is increasingly described as China's only ally. Over the past few years, coinciding with Xi's rise, Chinese state media have taken to referring to Pakistan as "ba tie", or "iron brother".
Xi has made an economic corridor to Pakistan a central feature of his pet Silk Road initiative, planning roads and energy projects in a corridor that runs through Pakistan-occupied Kashmir despite India's protestations. What is worrying for India is that perhaps for the first time in more than a decade, China's policies are being shaped by Pakistani considerations. "The irony is," one senior diplomat put it, "they are re-hyphenating us with Pakistan at a time when we have finally de-hyphenated China and Pakistan." This was also evident in the NSG.
To secure China's support, President Pranab Mukherjee was asked to request Xi's cooperation when he met him during his visit in the last week of May. Jaishankar, who accompanied him, also spoke to his Chinese counterpart and the foreign minister. It is learnt that China conveyed the message that "we may not be open about an NSG membership for India but we are not closed either". The foreign secretary then made a secret visit to Beijing, days before the NSG was to meet in Seoul, something india today was the first to reveal. It is learnt that China told Jaishankar, "We are prepared to look at accommodating India. But it can't only be about India in the long run." China was clear: We are willing to let you in but you should not come in the way of Pakistan's entry. China's concern was that once India was in the NSG, it would block Pakistan's chances.
For India, this was the opening it was looking for. Modi's team was confident that if criteria were laid down for entry into the NSG, India was in an excellent position to qualify. They were also aware that Pakistan, with its poor track record stood little chance of gaining entry until it cleaned up its act. Moreover, as some nations pointed out, it was better to check Pakistan's nuclear ambitions by dangling the NSG membership as a carrot.
So it was a confident Swaraj who, in her annual press conference in Delhi a day before the NSG met at Seoul, asserted "China is not blocking India's entry to the NSG. It is only talking about criteria and procedures. I am hopeful that we would be able to convince China to support our entry to the NSG." As far as the Pakistan application was concerned, she said, India being a non-member has no comment, but clarified that "we will not oppose entry of any nation to NSG" and "each country should be considered on the basis of their merit.
CHINA: FROM LINKAGE TO BLOCKAGE
When Jaishankar and Amandeep Singh Gill, the MEA joint secretary in charge of nuclear affairs, flew in to Seoul for the NSG plenary, they were confident that if China kept its word India would be through. But they were not taking any chances. They divided the NSG members into five groups: the core group of supporters included the US, Russia, Japan, Canada, the UK, Germany and Australia, who would not only back India but were willing to persuade others to come on board. Then there was a "wider support group" consisting largely of East European countries, Central Asia and some from Western Europe like the Netherlands and Belgium. Together, these groups totalled 38 of the 48 countries.
Of the remaining 10 countries, the third group consisted of six countries, including Brazil, Switzerland and Turkey, that believed in what was termed the "soft process". These countries were willing to back India at the meeting if the NSG simultaneously agreed upon criteria for admitting non-NPT members like India and Pakistan. The fourth group consisted of three members-Austria, New Zealand and Ireland-who were categorised as wanting the "hard process". They were not opposed to India's bid but wanted to get the sequencing right-maintaining that the criteria should be fixed first before the Indian or any other application could be considered. China was unique in its opposition and was classified as a Group of 1. It was willing only if Pakistan's application was also considered. But within a day China changed its stand when it found that very few NSG members wanted Pakistan's case to be considered. The estimate was that 46 members opposed Pakistan and only two, China and Turkey, were supportive.
When China realised that there was stiff opposition to Pakistan's application, it changed its stand from "linkage to blockage", as an Indian official put it. China first pursued procedural tactics and told the chair, now headed by South Korea, that India's application was not on the agenda and couldn't be discussed. India's supporters hit back by forcing the chair to agree to a discussion. It was then that China turned the tables on India. South Korea needed China's backing to come out strongly against North Korea's nuclear shenanigans. As a quid pro quo, China persuaded South Korea into passing a killer decision: There would be a discussion on India's application but no decision in this meeting.
The moment the chair decided the norms, India knew its chances to be admitted in this round were close to nil. Nevertheless, Modi raised the stakes by requesting Xi in his meeting with him on the sidelines of the Shanghai Cooperation Organisation summit in Tashkent, to consider India's case for the NSG in a "fair" and "objective" manner. Meanwhile, with no decision in sight, some nations that had pledged support to India, talked of evolving criteria to permit non-NPT members, a development China cited as indicative of other members' opposition.
It also gave China the opportunity to put out its maximalist position: Unless a nation signs the NPT, it should not be admitted as a member. This was a no-no for India. Instead, India pointed out that the NSG stipulates that a member needs to "adhere" to the NPT rules but does not explicitly state that it should be a member. India pointed out that in 2008 when the NSG had given its waiver, India had agreed to the widest possible implementation of the NPT provisions and had already proven its credentials.
Knowing that waiting for the next year's NSG plenary could create fresh problems, India then lobbied hard to keep the door open for it. Mexico pushed for Argentina's Grossi, the outgoing chairperson, to head an informal panel to evolve a consensus on how to proceed with India's application. India is hoping that this winter will bring it some nuclear contentment. When contacted by india today, Jaishankar remained cautious and said, "The door remains open and we will stay the course."
While India came out with a tough statement, singling out China for its opposition, the MEA later toned down the rhetoric. Rather than demonise China, the strategy was to use persuasion. In his interview to a television channel, Modi didn't reveal any bitterness and instead said, "Foreign policy is not about changing mindsets. It is about finding common ground and where our interests converge and how much." The fallout of the NSG issue on the bilateral relationship is still uncertain. In the past, India and China have largely succeeded in compartmentalising problems such as the boundary issue to keep relations on an even keel. In truth, India's leverage on this front is limited. Two-way trade which touched $71 billion last year is heavily skewed in China's favour, with the deficit reaching $51 billion.
What is clear is that playing the trade card would also come at a price: the Narendra Modi government has worked overtime to turn around investor sentiment in China after a decade of lukewarm response. Beijing is going forward in a big way with infrastructure projects that India needs, from massive solar plants in Andhra Pradesh to energy parks in Gujarat. Investments in 2015 were double the total amount of the past decade.
Overall, Jaishankar remains sanguine that India's membership would get through saying, "We will continue to use reason and our powers of persuasion to win NSG member nations over including China."
with Ananth Krishnan in Beijing
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