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And if India conducts a test?

Sure, a clampdown on future nuclear cooperation and a return of materials procured from the US will follow. But by not buying materials and equipment from the US, we should bypass this scenario, writes Robinder Sachdev.

india Updated: Aug 17, 2007 00:10 IST

Under the US Atomic Energy Act and the Hyde Act, there is no way that India can avoid sanctions if it conducts a nuclear test in the future. Sanctions will imply a clampdown on future cooperation, as well as the US administration being required to demand the return of materials that are of US origin. In such a scenario, how can the Indian government convince its people that investment of billions of dollars and energy supplies will not be jeopardised if India conducts a test?

The answer may lie in a simple but imaginative right-sourcing strategy: don’t procure materials and equipment from the US. If India doesn’t buy equipment and fuel from US suppliers, then its investments and energy security aren’t dependent on any US action after a test. By procuring its supplies from countries other than the US, India will insulate itself from sanctions and return of materials.

In the absence of any other compelling rationale by New Delhi to assure that its investments will not be prejudiced in the future, right-sourcing seems to be the only mechanism that can defend its position. Such a strategy to deepen strategic relations with the US, yet not be dependent on their supplies, will also dovetail neatly into India’s strategic worldview where it sees an emerging balance of powers in the 21st century global order. The US government may well be aware of this strategy. Its willingness to sacrifice narrow commercial interest of one particular industry in order to obtain a broader political and economic partnership with India may be unique in its history, and that speaks of the vision and stakes at hand.

In a world where the US is faced with a mercurial Russia, an inscrutable China, the worldwide seepage of Islamic terror, and a schizophrenic and tottering Pakistan, there is simply no other nation with India’s size and democratic ethos to counterbalance the myriad challenges of the 21st century. The overriding strategic context of the relationship with India is compelling enough for the US administration to term the 123 deal as a matter of ‘national interest’. With the issue of reprocessing seemingly resolved to New Delhi’s and Washington’s mutual satisfaction, the only issue of substance on which the Left and the Right has zeroed in is the hypothesis of a nuclear test in the future. A failure on the part of the government to satisfy the naysayers on this count can result in the issue snowballing into nationalist rhetoric.

The only way out for New Delhi to declare that it has not compromised its sovereign right to test may be to articulate the right-sourcing strategy and thereby win their support for the deal. Once out of the doghouse, India can then mitigate its risk of US sanctions by sourcing its fuel and equipment from nations other than the US. Moreover, it may look only at fuel supplies in the first instance, and source the equipment as and when needed.

As Robert Kennedy once famously said, one-fifth of the people are against everything all the time. But if more than ‘a fifth’ oppose the deal in India, the government may have to spell out its right-sourcing strategy quickly. Such a strategy also insulates India’s foreign policy from unforeseen pressures in the future to align with the US on matters where it may hold divergent views. There is no doubt that American business has been one of the main forces in favour of the deal. India’s adoption of such a right-sourcing strategy might kick off a storm in corporate America. Such a response will be myopic. If the speculation is sound, then it is only the nuclear industry that could lose out, while the sum total benefit to all other industries from a newer paradigm of US-India relations will easily outweigh the loss to the American nuclear industry.

If, on the other hand, India is unable to defend its case, then the whole deal may be off. Thus the economics for corporate America boils down to this: Is it better to have a deal that would provide a major boost for US businesses in India, although without the participation of the American nuclear industry or have no deal at all? This is not to say that the nuclear industry will completely miss the boat, for it can innovate and be a player in the Indian market — something like the Japanese nuclear industry, which is structured so as to overcome its domestic compulsions, and is still a serious player in world markets.

Beyond the economic calculus, the 21st century demands an overarching strategic calculus among nations. For how will the global markets thrive and entrepreneurs profit unless there is security and freedom in the markets? The 123 Agreement is a bold attempt to create a paradigm that will help peace in our homes, and ensure a more benign scenario for Indian, American and other businesses to operate in free markets globally.

The era of atoms for peace is over. Now it is about atoms for peace and trust.

Robinder Sachdev is President, Imagindia Institute , New Delhi