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The U.S.-India Nuclear Deal: Current Situation

Richard Boucher, Assistant Secretary for South and Central Asian Affairs
Remarks to U.S.-India Alliance and Congressional Taskforce on U.S.-India Investment and Trade Relations Event
Washington, DC
September 11, 2008

ASSISTANT SECRETARY BOCHER: Ladies and gentlemen, I think we owe a lot to Congressman Faleomavaega for hosting this meeting and for his steadfast leadership on the taskforce, his effort to improve and expand U.S.-India economic relations and trade. He has been a vital, vital part of this relationship and wherever we get to on the government-to-government business that we’re involved in, I think a momentum of this relationship, much of it is done by the trade people, by the investors, by the business people who keep going back and forth, thinking of new ideas and new ways of moving forward. So, your hosting us here on the Hill today is very welcoming and is another sign of your commitment to this and how much you’ve done over the last few years in trying to expand this relationship and the trade aspects of this relationship. I also thank Congressman Cannon and Congressman McDermott for their support. We are indeed here together today in the center of the action, and Mr. Puri, I admire your timing for doing this here today. This is where the action is right now.

We’ve obviously come through a lot with the US-India civil nuclear deal. We’ve managed to work through the Nuclear Suppliers Group by working closely with a whole lot of countries there, working with India, with other supporters like France, and the UK, and Russia, and Germany and several others. The Nuclear Suppliers Group managed to get forward consensus among 45 countries to support this agreement. It is a historic agreement and I want to go through some of the reasons why. I think most of you in the audience and certainly in the Alliance understand the sort of fundamental importance of this, which brings the U.S.-India alliance to a new level, brings India into a cooperative mode with the international nonproliferation effort. And that has a very profound importance for all of us, but it also has some specific benefits. And what I’d like to do today is talk briefly about the overall relationship and then try and put some of the specific benefits of this agreement in that context.

Building a key strategic partnership with India has been a key foreign policy priority for this administration and frankly for the previous administration, just as I would expect it to be major priority for the next administration. President Bush and Prime Minister Singh signed the joint statement in July of 2005 that said successful transformation of the U.S.-India relationship will have a positive and decisive influence on the future international system as it evolves in the new century. That remark is very obviously true and that’s a foundation of what we are doing. We have supported, with the help of the American people and the Congress, much more strong economic links with India, and we have talked about that -- investment, opening up new sectors, a lot of back and forth. And one of the things I was surprised to learn when I was in India last month was -- the numbers aren’t completely clear yet, but it appears that the flow of Indian investment into the United States is almost as big as the flow of American investment into India these days and the Indian investors are actually creating jobs in the United States at an expanding rate. And that is good for us as well as for India.

A lot of this relationship is based on the people. It is based on the 80,000 or more Indian students we have in the United States -- that is more than any other country. It is based on the three million or so Indian Americans who live here. Bilateral trade is exploding. All these people are on the Internet with each other, they are talking to each other, they are visiting back and forth, they are sending e-mails and they are coming up with ideas. And so, a lot of these businesses are run by schoolmates, classmates, relatives, people who go back and forth, and its not like the old days when somebody used to come from India to the United States and it was really hard to travel back and forth, it was hard to keep in touch, communications were slow. Now it is just a buzz back and forth all the time, and the better the technology, the bigger the bandwidth, the more the ideas, more ideas come forward and it prospers. We see the numbers: India has become a key market for American goods. U.S. exports to India were up 75 percent last year alone. So this kind of trade is burgeoning. Academic exchanges are burgeoning. People-to-people exchanges back and forth are burgeoning. Defense cooperation, defense sales are burgeoning. So it is really a marvelous achievement in the bilateral relationship.

As you look at where we have come bilaterally, I think one of the elements that you can start to see emerge -- and maybe this is where the new administration can take it -- is we are going global. We are increasingly working with India on global issues like climate change, like nonproliferation, like democracy around the world, like assistance to Afghanistan or to Africa, and I think that’s kind of pointing to the future of the relationship. But on the bilateral basis we have done so much and I think this agreement really brings it to a new platform, to a new level.

There are a lot of specific advantages of concluding this arrangement with India on several nuclear cooperation [issues]. The first is energy for development. India is looking to satisfy 20 percent of its future power demand with nuclear energy compared to three percent today. For people across India, if they could do that, that means the light goes on for people to do homework, that means the quality of life improves, that means economic opportunities grow, that means coal chains for farmers to sell their vegetables at better prices. Power is an essential part of the economic transformation of India and we want to be in the central part of that power picture. The expansion also will expand our trade, which is a purpose of the Alliance. Some estimates have said that the new reactor contracts under the agreement could create something like 3,000 to 5,000 new jobs in the United States as well as an additional 10 to 15 thousand indirect jobs; that was a study by the Council on Foreign Relations. So, I can’t explain the numbers, that’s just what I read.

The second area that I’d highlight for you is climate change. We are working internationally with India on climate change issues and indeed if you look at what India is trying to do with its energy picture, it is going to need more and more energy. Prime Minister Singh projects the initiative could mean up to 40 gig watts of power capacity by 2015. That is very ambitious but even a program that gets halfway there – 20 gig watts – can reduce India’s carbon output by 150 million tons annually. That is equivalent to, say, a small European nation’s worth of carbon emissions. So it is in all our interests to have India develop clean power instead of dirty power.
Finally, this sort of going global idea, that India is coming more and more into the international nonproliferation mainstream. India has always had a good record, an excellent record on nonproliferation, and what we are seeing here is that they are going to bring something like 65 percent of their current reactors under the International Atomic Energy Agency safeguards, open those up to inspection, phased in by 2014. The foreign minister repeated just the other day that they would continue their unilateral moratorium on nuclear testing and we have seen India adhere to and harmonize its export control systems with those of nuclear suppliers and missile technology exporters from around the world ,so that India’s controls are at the same level as those of other countries. So India is now, what you might say, a parallel partner with the international nonproliferation effort and I think that is very important.

We have worked closely with the Indians over the last several years. We are also working with them to make sure that the Indian market is open to U.S. companies, make sure that U.S. firms will receive fair, equal treatment on commercial opportunities. And I would note again that the foreign minister earlier this week said the Indian government wants to wait until the U.S. Congress acts before India signs nuclear cooperation agreements with other countries. So there will be plenty of competition when the time comes, but for the moment [it] looks like we are all trying to get the whole thing settled and then we’ll address those issues. Now with the approval of the agreement by the International Atomic Energy Agency and the Nuclear Suppliers Group, two of the three key steps have been achieved. So the locus, the action, the center of the action is now right here in Washington and right here on Capitol Hill with the U.S. Congress.

In accordance with the Hyde Act and the Atomic Energy Act, the President has submitted the 123 Agreement to Congress along with the determinations required by the Hyde Act that address India’s progress on nonproliferation commitments from the 2005 joint statement. And Congress will need to review and approve the 123 Agreement. As Congressman McDermott said, this is different, this is new, and we should expect a fair amount of discussion and a lot of questions to be asked. But we also know from the substantial majorities, very strong bipartisan majorities, who supported the Hyde Act that there is great support on the Hill for this agreement, for going forward with this kind of cooperation with India. And I hope after we have discussed and reviewed the determinations, the legal framework, that we will be able to complete the work and proceed with the help and support of members of Congress. So we are submitting -- we have submitted a very strong package, fully consistent with the requirements that Congress set out with bipartisan support in the Hyde Act. We understand how tight the Congressional calendar is this fall, but we do look forward to continuing our work with Congress on the initiative and we hope that legislation can be passed before Congress adjourns for the year.

So there we are. We are trying to complete the journey that we all began three years ago and some people began even longer before that, and realize the kind of opportunities that are going to shape our relationship and really shape the world in the 21st century. So I thank you all for your contributions to that endeavor and I’m sure you will continue to work very, very hard to try to see this realized.

So, with that, I’m happy to take a couple questions.

QUESTION: Congressman McDermott has told us that time is short, not to mention some of the Congressmen are running for reelection. How do you respond to the fact that they just might not have enough time to review and vote on it?

ASSISTANT SECRETARY BOUCHER: Well, Congressman McDermott is obviously correct. We recognize there is a crowded calendar. It is a shorter session because of the election year. But there is also…among the many things that are important to get done, this is one of the things that is important to get done. I think that there are members in Congress that will help guide us and help tell us how to weave the path through here, because I think there are many members of Congress that understand this sort of fundamental importance of the agreement, have the desire and ability of getting this done this year.

QUESTION: Are there any suggestions that you are putting forth to Congress as to how they could go about dealing with the time frame? Everybody talks about finishing it by the end of this session, September 26, and you’re not sure whether it is going to end on the 26th and you’re not sure whether there is going to be a lame duck session. So, if you’re not sure of so many things, how do you assure that it is going to pass?

ASSISTANT SECRETARY BOUCHER: Well, you probably spend more time on Capitol Hill looking at procedures and how they operate than I have. But the one thing I know about Congressional scheduling and Congressional procedures is that it is entirely up to them. The point that we have to make is to look for people that agree with us, that it is important to do this, that it would be a major contribution to the U.S.-India relationship, major contribution to international nonproliferation efforts if Congress can find a way forward. And then we listen and take their advice and they tell us who we have to talk to and members of Congress who are interested in seeing this passed are also working with their colleagues. And hopefully they will tell us what the way forward is because it really is entirely up to them how they operate up here on the Hill.



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