Stratfor on US-India N-Deal

A Stratfor article on the US-India N-Deal:

India, U.S.: Regional Fallout from the Nuclear Deal
October 2, 2008 | 1942 GMT


Summary

The U.S. Congress approved the U.S.-Indian civilian nuclear deal late Oct. 1. While some sticking points remain, U.S. President George W. Bush and Indian Prime Minister Manmohan Singh are expected to grant the deal final approval as early as the week of Oct. 5. Geopolitically, this deal brings India into a strategic partnership with the United States — a major irritant to the Chinese and the Russians. For the Pakistanis, this deal gives New Delhi a long-term strategic advantage over Islamabad, marking an inflection point in Pakistan’s already deteriorating relationship with Washington.
Analysis

Despite the chaos in the U.S. Congress over the financial bailout plan, the U.S.-Indian nuclear deal managed to make its way through the Senate late Oct. 1.

The deal is not exactly what India was angling for, however. The version Congress approved included two contentious provisions. One would ban India from reprocessing nuclear fuel (which would allow for the extraction of weapons-grade plutonium), while a second would nullify the deal should India conduct a nuclear test.

India wanted the agreement reworded ambiguously to get around these sticking points, and is now expecting U.S. President George W. Bush to issue a signing statement to appease Indian concerns when he approves the deal. A signing statement is essentially a written pronouncement in which the president conveys his disagreement with a particular provision — or provisions — of a law and states that he does not plan to implement the disputed provision or provisions as Congress intended; Bush reportedly has signed hundreds of such statements during his term in office. The statement itself is nonbinding, and does not have to go back to Congress for approval, leaving it up to the next administration to decide how exactly to implement the deal should India violate either of the two contentious provisions.

After barely surviving a no-confidence vote that centered on the U.S.-Indian nuclear deal, Indian Prime Minister Manmohan Singh needs this signing statement to fend off opposition at home. In any case, it appears Bush and Singh will sign the deal within the next two weeks.

The nuclear deal serves several key purposes. For India, gaining access to the global nuclear fuel and technology market after a 30-year ban will significantly enhance India’s ability to cope with skyrocketing energy demand at a time when global crude prices are at record highs. Moreover, now that India can buy nuclear fuel from global suppliers for its civilian nuclear facilities, it theoretically has more domestic uranium at its disposal to expand its nuclear weapons program should it find the strategic need to do so. The United States, meanwhile, has a host of U.S. companies in the nuclear industry eager to get a sizable chunk of the Indian nuclear market. These companies face considerable competition from France and Russia, which already have nuclear deals readied with India. If India wants to build a lot of nuclear power plants on a short timetable, however, the United States is the most capable of meeting this demand.

But this deal is much more than an economic agreement. By signing this pact, the United States and India are entering into a strategic partnership designed to sustain pressure on Pakistan, hedge against China and Russia, and safeguard energy supply lines from the Persian Gulf — all of which greatly concern China, Russia and most of all, Pakistan.

The Chinese knew they would not be able effectively to block the deal in the Nuclear Suppliers Group or the International Atomic Energy Agency. But China is still nervous about the agreement, and is looking to counter this fortified U.S.-Indian alliance in coordination with Pakistan, mainly through expanded Chinese-Pakistani civilian nuclear cooperation — and potentially, a fairly significant sale of military aircraft to Pakistan.

Russia, on the other hand, is planning on staying cozy with India through energy and defense incentives such as the (problematic) delivery of the Admiral Gorshkov aircraft carrier, a pending offer for India to get a large stake in the Sakhalin 3 offshore energy project, and a separate deal for Russia to build four nuclear reactors in India. High-level meetings between the Russians and the Indians are in the works to move these deals along in the coming months.

The Pakistanis are at a severe disadvantage with regard to India. New Delhi is signing this agreement with Washington as Islamabad’s relationship with Washington has hit an all-time low due to a raging jihadist insurgency that Pakistan is both incapable and unwilling to manage on its own. The alliance the United States entered into with the Pakistanis after 9/11 was for a short-term strategic interest, namely, to eradicate the threat from al Qaeda. The bilateral nuclear agreement Washington has signed with New Delhi, however, formalizes a broad strategic realignment in the works since the breakup of the Soviet Union. The need for this alliance is now more urgent than ever in Washington’s view given Moscow’s increasingly aggressive stance toward the West.

Though the U.S. priority at present involves working with the Pakistanis to stamp out the Islamist insurgency, Islamabad’s relevance has unquestionably declined in Washington’s eyes. India now has been officially recognized as a responsible nuclear power and a major ally of the United States — and with that comes a long-term strategic advantage over India’s South Asian foe.