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A win-win agreement

The real concern is whether the agreement is in India’s national interest. While no one can be certain about the long-term ramifications of such a complex agreement, all available information suggests that it will be hugely valuable to India, writes Kaushik Basu.

india Updated: Jul 20, 2008 00:13 IST

The drama over the nuclear agreement seems to have caught many observers by surprise. But what happened was completely predictable; it could have been scripted in advance. The Congress was throughout clear that it considered the 123 Agreement to be of national interest. The stumbling block was the Left Front (actually a few members of the CPI(M) politburo and some sundry others). It leveraged its power as a key supporter of a minority government, and, every now and then, threatened to withdraw support and compel an early election.

Where the politburo made an elementary mistake was in not realising that the threat to force an election ceases to be a threat when the regular election is round the corner. It was, therefore, inevitable that as the time for the general elections drew closer, the Congress would move forward. The only surprise is that the Left Front leaders thought that it could have been otherwise.

All this is moot now. The real concern is whether the agreement is in India’s national interest. While no one can be certain about the long-term ramifications of such a complex agreement, all available information suggests that it will be hugely valuable to India; and for a parliamentarian to vote against it for reasons of political expediency will be wrong.

Look at the two most common objections to the deal. According to the 123 agreement, India will give the international authority the right to inspect that its civilian-use nuclear facilities are not being used for military purposes and, in return, the US and other members of the Nuclear Suppliers Group (NSG) will agree to supply India nuclear fuels and other products for the manufacture of nuclear energy. Those opposing the deal point out that, while we give the international authority the right to investigate our facilities in perpetuity, they do not give us assurance of supplying nuclear fuels forever. But this is not worrying at all once we recall that (1) it is only our civilian facilities that are being opened to international inspectors, and (2) it is up to us to decide which of our nuclear facilities are designated civilian.

Once the agreement is signed, India will be in a position to expand the production of nuclear energy. It is true that initially nuclear power will be a small part of our total energy needs but, once this sector develops and if the prices of oil continues to rise, nuclear energy can become a critical factor for the sustainability of India’s economic growth, industrialisation and the alleviation of poverty.

This relates to the second objection. Some politicians have been on television pointing out how the agreement is economically costly because nuclear energy is not economically viable. Their arithmetic is questionable. Even if it were not, the big mistake is the presumption that, once we sign the 123 agreement, we will have to buy nuclear fuels. But that is not the case. Soon after India carried out its first nuclear test in 1974, an international blockade was placed against India. The door was shut on the country for importing dual-use nuclear materials. What this nuclear agreement is going to do is to make sure that others do not hold the door shut on us. If we want to keep the door shut, and not expand nuclear energy production, that will, of course, be up to us. The agreement in itself does not commit us to any expenditure.

Another warning sounded by some is that this agreement draws us into the American foreign policy sphere. This is mistaken for two reasons. The pressure to move into the American sphere will exist whether or not we have this agreement. It will be up to us to retain our (I believe worthy) non-alignment policy. Second, if it true that an agreement with the US means the US will influence India, surely it also means that India will influence the US. It requires a deep sense of inferiority to recognise the former but not the latter.

To me what is disappointing in this political drama is the Left Front teaming up with the communal parties. There can be no denial that in terms of personal financial probity, the Left stands out in India’s murky politics. It is a pity that it did not bring this probity to the theatre of politics. There are so many matters on which the Left could rightly have pressurised the government — the growing inequality, the large amount of poverty, the surging inflation. Instead, it chose to vilify what is a truly remarkable achievement of the Prime Minister — to lift an international blockade of over three decades, and open India’s options for newer forms of energy supply.

(Kaushik Basu is C. Marks Professor and Chairman of the Department of Economics, Cornell University.)