October 15, 2007 / 9:21 AM / 10 years ago

PM risks losing nuclear deal, and credibility

NEW DELHI (Reuters) - Life is ebbing away from India’s controversial nuclear cooperation deal with the United States after the government appeared to back down in a row with its communist allies to save itself from a snap election.

But in equal trouble, political analysts said, is the credibility of the government and of Prime Minister Manmohan Singh, who had staked his reputation on a deal which he had said future generations would look back on as historic.

Looking rather crestfallen, Singh seemed to back down at a seminar on Friday, saying it would be a disappointment if the deal did not go ahead, but that life would go on. His government, he said, did not want an early election.

“Dr Singh says it is not the end of life. Which is true enough, but it could be the end of Manmohan Singh,” the Business Standard wrote in an editorial titled “A hostage in office”.

“There is life after the nuclear deal? Sure,” echoed the Indian Express. “But what kind of life?”

The government’s communist allies had threatened to withdraw crucial parliamentary support if it pressed ahead with the deal, which would allow India to import U.S. nuclear fuel and reactors despite having tested nuclear weapons but not signed the Non-Proliferation Treaty.

For weeks the government seemed determined to face the left down. Earlier last week, Singh’s Congress party and coalition leader Sonia Gandhi called opponents of the deal “enemies of development”.

Then, in a meeting with the left last week, came the apparent flip-flop: more talks would be held with the left, and negotiations with the International Atomic Energy Agency -- crucial to the deal -- would remain on hold.

The government seemed to have lost its nerve, with its other coalition partners reluctant to face the electorate anytime soon. The temptation to push through one more, populist budget next February may also have been impossible to resist.

Broadcaster and columnist Karan Thapar had been convinced Singh would resign if the deal was scuppered. That impression now appears mistaken.

“If something as important as this is jettisoned for another 18 months in office, the verdict of history will be that the PM has opted for his own interests and his party’s interest over his country’s interests,” he said.

DEAL IN DEEP FREEZE

Singh, said Thapar and others, faced the remainder of his term with his credibility seriously diminished, with the government’s credibility in Washington -- and in other foreign capitals where it had lobbied hard for the deal -- seriously undermined.

“All this casts serious doubt over what the Manmohan Singh government can now engage in,” the Mint business newspaper wrote in an editorial entitled “Nuclear dodo” on Monday.

“With a near-death experience, the pressure to indulge in populism will become inexorable,” it said, adding: “Investors may have doubts about India again.”

But can the nuclear deal still be saved?

The left’s opposition to the deal seems implacable, and time is running out fast to win them round. The agreement still needs to get through the IAEA, the 45-nation Nuclear Suppliers Group and get to the U.S. Congress before next year’s presidential election sweeps everything else off the table.

A Democrat in the White House is unlikely to push the deal through in its current shape after those elections, most analysts argue.

That gives the government a matter of weeks at the most.

Columnist Vir Sanghvi, writing in the Hindustan Times, wondered if the left still could be convinced now the government has taken a more conciliatory, less confrontational approach.

And in the Times of India, columnist K. Subrahmanyam wondered if Singh really meant what he said.

Rather like a finance minister denying a currency would have to be devalued, right up to the announcement of a devaluation, he argued, Singh was duty bound to stick publicly to his coalition partners -- right until the moment he pulled the plug.

But right now, that interpretation is not widely shared.

The nuclear deal is in “the deep freezer”, the Times of India wrote in an editorial, describing it as a blow to India’s global aspirations and a diminution of its international stature.

”By backing down after raising the bar so high the government has signalled, in effect, that it is weak and open to blackmail on any issue by any pressure group in parliament.

“With one and a half years remaining for polls, and the Left demonstrating it holds the whip hand over government, hopes for economic reform are dim.”

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