Neil King reports on WSJ
. Posting in full.
President Bush has known for months that he would have to pay a price to solidify his long-touted partnership with India. He is about to find out how much.
After months of trying to resolve deep divisions, the nations are set to make a final push next week to seal a pact opening the door to deeper political, military and commercial ties between the U.S. and India, a nation with more than a billion people and a rapidly growing economy. At its heart lies a controversial proposal to provide New Delhi with nuclear fuel and technology, which critics say could undermine international efforts to stop the spread of nuclear weapons.
Negotiations have dragged on, often acrimoniously, since it was announced on the South Lawn of the White House two years ago. National Security Adviser Stephen Hadley is scheduled to meet next week at the White House with his Indian counterpart, N.K. Narayanan, in what Indian diplomats said could be several days of tough negotiations. Leading the U.S. talks will be Undersecretary of State Nicholas Burns, the U.S. point man for the nuclear deal.
The question is whether the administration can hammer out a compromise on nuclear cooperation that doesn't undercut existing U.S. law or give India leeway to develop a new batch of atomic weapons on top of the ones it already has. India is demanding several painful concessions, U.S. officials and experts said, that are almost certain to anger key leaders in Congress from both parties.
Hanging in the balance in the nuclear-and-technology proposal are tens of billions of dollars in potential energy, aircraft and other deals, U.S. business executives said. India is looking to build dozens of new electricity plants and to drastically increase its military hardware over the next five years.
India's energy minister has been traveling the U.S. talking up $50 billion worth of energy deals India plans to award over this period, and another $200 billion of deals down the road. U.S. aircraft makers are lining up to vie for a 126-plane fighter-aircraft deal that could be worth up to $10 billion over the next several years.
India is also floating a potential $30 billion of nuclear-reactor sales over the next 20 years, piquing the attention of companies such as General Electric Co. and Westinghouse Electric Co.
"This deal is very very important to both countries," says Bill Begert, vice-president at Pratt & Whitney, a unit of United Technologies Co., which hopes to supply engines for the fighter-jet deal. "If this falls apart, it will have real near-term consequences for everyone in the defense industry."
The U.S. Chamber of Commerce, as well as companies such as GE and Boeing Co., said they are ready to launch a big lobbying campaign to persuade Congress to bless the final deal, as soon as any compromise is nailed down. "All the right tom-toms are beating for a successful conclusion to this deal, which will be huge for U.S. companies," said Ron Somers, head of the U.S.-India Business Council within the U.S. Chamber.
The campaign could face stiff opposition from a number of lawmakers, including the Democratic and Republican leaders of the House Foreign Affairs Committee, who have raised an alarm over India's military and economic ties to Iran. New Delhi is cooperating with Tehran on a proposed natural-gas pipeline from Iran across Pakistan to India. But India has also supported efforts to keep Tehran from developing a nuclear weapon.
Pakistan, a longtime Indian rival with nuclear arms of its own, presents another foreign-policy wrinkle. The neighbors nearly went to war as recently as 2002, and any advances in India's nuclear capabilities could further unsettle the government of President Gen. Pervez Musharraf, currently beset by countrywide protests after he cracked down on the judiciary and ordered the siege of a fundamentalist, activist mosque in Islamabad.
Pakistan also has sought similar consideration from Washington, but was rebuffed because it has secretly provided nuclear technology to other nations.
Many U.S. lawmakers also have vowed to oppose any deal that loosens restrictions on how India can use U.S.-provided nuclear fuel.
The stakes are high for Mr. Bush's embattled foreign policy. Aides often cite the thawing of relations with India as a key accomplishment of his presidency at a time of deep frustration in the Middle East and rising tensions with powers such as Russia and China. The nuclear deal, they say, is key to cementing a partnership between the world's oldest democracy, the U.S., and its largest, India, after decades of chilliness.
For years, India was close to the Soviet Union and a leader of the anti-U.S. nonaligned movement. Until recently it was also openly hostile to outside investors.
The U.S. also hopes to nurture India as a bulwark against China's growing military and economic power in Asia. While U.S.-Indian political ties have lagged, bilateral economic and trade relations have grown rapidly in recent years -- albeit, not as fast as U.S.-China trade ties. India's huge infrastructure and procurement needs have been especially tantalizing to American companies. U.S. exports to India rose 25% last year, to $10 billion, from the previous year, while imports from India were up 16% to $21.8 billion.
Mr. Bush's efforts to support India's nuclear program have stirred huge controversy since he announced the proposed deal with Indian Prime Minister Manmohan Singh in 2005.
India has never signed the global pact for controlling the spread of nuclear technologies, the Nuclear Nonproliferation Treaty. New Delhi stunned the international community in 1998 when it conducted three underground nuclear tests in the deserts of Rajasthan state. The U.S. responded swiftly with economic sanctions.
Critics said that by embracing India's nuclear program, the U.S. is weakening international efforts to deter countries such as Iran from becoming nuclear states. The White House argued that India is an exception, as a democracy and as a country with no record of selling nuclear materials abroad.
In December, a wary Congress finally passed legislation that ratified nuclear cooperation with India. The Hyde Act, as it is called, imposed numerous restrictions on how India could utilize U.S. nuclear supplies. India has expressed particular distaste for provisions that seek to punish it if it conducts any future nuclear tests. If India does test, the Act requires Washington to demand that New Delhi return all nuclear material or equipment provided by U.S. suppliers.
India also wants to scrap language that prohibits it from reprocessing any fuel provided for power plants, which might then make it suitable for use in weapons. And India opposes a requirement that the U.S. president annually certify that it is complying with the rules; New Delhi says that provision would lead to constant meddling in its nuclear program.
Indian diplomats declined to discuss specifics of what they will push for next week, but said this round of talks could prove critical. "We don't want to prejudge the results, but we have been making steady progress," said Rahul Chhabra, a spokesman for India in Washington. "We look forward to sealing this at the earliest possible date."
A senior U.S. official involved in the talks said he is optimistic a deal would be completed -- "if not next week, then soon." He also said the U.S. would make no concessions that would run counter to the Hyde Act. "We will honor every aspect of the Hyde Act."
Other U.S. diplomats working on India put the chances for passage at not much better than 50-50. They said the process has increasingly been held hostage to political crosswinds in Congress and the Indian parliament. A collapse of the talks, said one U.S. official working on India affairs, "would seriously undercut our hopes for the relationship."
The fact that the talks are now being handled at the highest political levels, though, suggests to some that tough concessions may be coming.
"It's pretty clear that the whole point of India taking this to the White House is to try to get the president to bend the existing law," said George Perkovich, an expert on India's nuclear program at the Carnegie Endowment for International Peace. "There is an element of desperation to all this."
Some skeptics argue that the benefits of providing nuclear technology are overblown, since diplomatic relations have already have improved markedly and India's economy is steadily opening.
"All of the advantages of this agreement are already under way. They are already happening," said Henry Sokolski, head of the Nonproliferation Policy Education Center, a Washington-based policy organization.
Highly unlikely that negotiations will drag on much further.