Congress OKs Indian nuclear deal, sends to Bush

WASHINGTON Thu Oct 2, 2008 1:12pm IST

India's Prime Minister Manmohan Singh gestures to photographers upon his arrival at the Indian parliament in New Delhi in this July 22, 2008 file photo. The U.S. Congress has approved a landmark deal ending a three-decade ban on U.S. nuclear trade with India, unleashing billions of dollars of investment. REUTERS/B Mathur

India's Prime Minister Manmohan Singh gestures to photographers upon his arrival at the Indian parliament in New Delhi in this July 22, 2008 file photo. The U.S. Congress has approved a landmark deal ending a three-decade ban on U.S. nuclear trade with India, unleashing billions of dollars of investment.

Credit: Reuters/B Mathur

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WASHINGTON (Reuters) - The U.S. Congress has approved a landmark deal ending a three-decade ban on U.S. nuclear trade with India, unleashing billions of dollars of investment and drawing the world's biggest democracy closer to the West.

The vote hands a victory to President George W. Bush on a top foreign policy priority, and will be welcomed by Indian Prime Minister Manmohan Singh who fought hard for the deal.

Final approval came late on Wednesday when the Senate voted 86-13 to ratify the agreement, sending the legislation to Bush to sign into law. The move came just ahead of an expected trip to India this weekend by U.S. Secretary of State Condoleezza Rice.

Bush said he looked forward to signing the bill.

"This legislation will strengthen our global nuclear non-proliferation efforts, protect the environment, create jobs, and assist India in meeting its growing energy needs in a responsible manner," Bush said in a statement.

The Bush administration says the pact will secure a strategic partnership with the world's second most populous nation, help India meet rising energy demand and open a market worth billions.

For India, it will cap a gradual rapprochement with the West since the days of socialist self-reliance, a process that began with economic reforms in the 1990s and has gathered pace with the spread of wealth and Western culture ever since.

"It is ... politically significant because it removes the last obstacle for strong India-U.S. relations ... it is the final breakthrough in making India a strategic partner with the U.S.," Rajesh Basrur, who teaches nuclear politics at Singapore's S. Rajaratnam School of International Studies, said on Thursday.

But critics say the deal does grave damage to global efforts to contain the spread of nuclear weapons, by letting India import nuclear fuel and technology even though it has tested nuclear weapons and never signed the Non-Proliferation Treaty (NPT).

NON-PROLIFERATION DISASTER?

"The U.S.-Indian Agreement for Nuclear Cooperation is, nonetheless, a non-proliferation disaster," said Daryl Kimball, head of the Arms Control Association, a non-partisan Washington-based policy organisation.

"Contrary to the counterfactual claims of proponents and apologists, it does not bring India into the 'non-proliferation mainstream'."

Mohan Malik, a professor at the Asia Pacifc Centre for Security Studies in Honolulu, Hawaii, said whether the deal damages the NPT remained to be seen, but it "brings about a shift in the balance of power in South Asia. It will not please Pakistan and China."

"In terms of India-United States, it will be a boost for business ties. It's not just about nuclear technology but the transfer of high technology to India," he told Reuters.

India has a yawning energy deficit, and the accord opens up a market worth billions to U.S. companies such as General Electric GE.N and Westinghouse Electric, a unit of Japan's Toshiba Corp.

Secretary of State Rice spent much of the past month in an all-out effort to persuade Congress to approve the pact. Bush wanted the deal approved before leaving office in January. Congress is expected to adjourn soon for elections.

CRITICS' FEARS

Critics said the deal was deeply unwise, overturning decades of U.S. policy of refusing to sell nuclear technology to nations lacking full safeguards against diversion of that technology into nuclear weapons programmes.

"Why are we rushing to pass this gravely flawed agreement?" demanded Senator Tom Harkin, an Iowa Democrat, before the vote. He said there was nothing in it to prevent India from resuming nuclear testing. India, which first detonated a nuclear device in 1974, last tested in 1998.

The deal would also weaken U.S. efforts to deny Iran a nuclear weapon, Harkin said. He said Indian entities already had sold sensitive missile technologies to Iran.

Supporters said they expected India to move quickly to negotiate a new safeguards agreement with the International Atomic Energy Agency.

"The benefits of this pact are designed to be a lasting incentive for India to abstain from further nuclear weapons tests and to cooperate closely with the United States in stopping proliferation," Indiana Republican Senator Richard Lugar said.

The deal could open up around $27 billion in investment in 18-20 nuclear plants in India over the next 15 years, according to the Confederation of Indian Industry.

There is global competition for that business. France announced on Tuesday it had signed a nuclear cooperation agreement with India, and Russia is building two 1,000-megawatt reactors in the southern Indian state of Tamil Nadu.

Local media say India's monopoly Nuclear Power Corp has tentatively picked four suppliers, including Westinghouse and France's Areva, for planned new projects.

India is also reported to be negotiating with General Electric, Japan's Hitachi Ltd and Russia's atomic energy agency Rosatom.

(Additional reporting by Alistair Scrutton and Simon Denyer in NEW DELHI and Melanie Lee and Jerry Norton in SINGAPORE)

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