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On-The-Record Briefing on the Status of the U.S.-India Civil Nuclear Cooperation Initiative and the Text of the Bilateral Agreement for Peaceful Nuclear Cooperation (123 Agreement)

R. Nicholas Burns, Under Secretary for Political Affairs
Washington, DC
July 27, 2007

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(10:25 a.m. EST)

UNDER SECRETARY BURNS: Good morning. As you know, President Bush just issued a statement commending the work done to complete the U.S.-India Civil Nuclear Accord, the so-called 123 Agreement. And as you also know, about 90 minutes ago, Secretary of State Rice and the Indian Minister of External Affairs Pranab Mukherjee issued a joint statement attesting to the fact that the United States and India have completed successful negotiations on this bilateral agreement. This is also known as the 123 Agreement.

I'd like to say a few words today about the agreement. I'd like to try to put it into context for you, as to why it's important in the development of our relationship, and then try to sketch out the outlines of that relationship.

In my view, this is perhaps the single most important initiative that India and the United States have agreed to in the 60 years of our relationship. It is indeed historic. It's already become the symbolic centerpiece of a growing global partnership between our two countries. And it reaffirms the commitment to cooperate in civil nuclear trade that was first agreed by President Bush and Prime Minister Singh on July 18th, 2005, here in Washington, and then reaffirmed by them at their summit in New Delhi on March 2nd of 2006.

I'd like to commend our counterparts on the Indian side. The Foreign Secretary of India Shiv Shanker Menon and his very able predecessor, Ambassador Shyam Saran. I made eight trips to India over the last two years. It was two years and two days of negotiations. They are exemplary professionals and I think that in building this partnership through a civ-nuke accord we've also built a relationship of trust between the United States and India.

On the U.S. side, our superb team of expert negotiators was led by Dick Stratford, who is a great resource for our government. He is someone with an unparalleled expertise on this issue for over 20 years, and I want to thank Dick and his team for all of their efforts.

In this agreement, the United States commits to full civil nuclear cooperation with India. And that includes research and development, nuclear safety, commercial trade in nuclear reactors, in technology and in fuel. And the agreement essentially provides a legal basis for the two countries to cooperate in this fashion.

We have also reaffirmed in this agreement the fuel supply assurances that President Bush and Prime Minister Singh agree to in March of last year. And we do so by supporting the creation of an Indian strategic fuel reserve and for committing to help India gain access to the international fuel market. Both of us -- the United States and India -- have granted each other consent to reprocess spent fuel. To bring this reprocessing into effect requires that India would first establish a new national facility under IAEA safeguards dedicated to reprocessing safeguarded nuclear material.

Our two countries will also subsequently agree on a set of arrangements and procedures under which reprocessing will take place. And for those of you who are steeped in this, you know that that's called for by Section 131 of the Atomic Energy Act of 1954.

In this agreement, India has committed to safeguard in perpetuity all civil nuclear material and equipment and also committed that all items under this agreement will only be used for peaceful purposes.

Those are the major features of what we have agreed upon, and it represents a tremendous and historic step forward for both of us. If we look back at the past decades of our relations with India, we know that our differences over nuclear issues have constituted the most significant divisive element in this relationship. The agreement that we announced today removes that fundamental roadblock and will bring us much closer together as two countries as a result.

And that is something that we Americans see as vital to our national interest, not only today but for the decades to come. And that is the first and most important strategic benefit of this agreement.

There are four other related benefits to this agreement as well. The first concerns nonproliferation. Some critics have said that this arrangement undermines the international nonproliferation regime and the NPT. We think that is absolutely incorrect. We think that the U.S.-India agreement strengthens the international nonproliferation regime. For 30 years, India has been on the outside of that system. It has been sanctioned and prevented from taking part in civil energy trade. With this agreement, India will open up its system to international inspection and it puts the majority of its civilian reactors under IAEA safeguards. This deal now brings India, soon to be the world's largest country, back into the nonproliferation mainstream in a way it was not before. And that is a tangible gain for India, as well as the United States and the rest of the world.

The agreement also sends an important message to nuclear outlaw regimes such as Iran. It sends a message that if you behave responsibly in regards to nonproliferation and you play by the rules, you will not be penalized, but will be invited to participate more fully in international nuclear trade. India has not proliferated, unlike North Korea in the past. India is willing to subject itself to full IAEA safeguards, unlike Iran today. And India has not violated its nuclear obligations, as Iran has and continues to do. Iran, of course, has reneged on its most important international commitments.

An additional related benefit is something we're all growing more concerned about everyday, and that is clean energy. We need to find alternatives to the polluting fossil fuel sources that the world has become so dependent upon. And India looks poised to continue its very substantial economic growth. It will require energy to sustain that growth. And with this deal, India will be in a greater position to increase the percentage of its energy sources and energy mix coming from clean nuclear power. That will help in the fight against global climate change.

The agreement also gives India greater control and security over its energy supplies, making it less reliant on imports from countries in the future, like Iran. That's currently a major problem for India; the fact that it needs these external supplies. And so India wants to find a way to resolve this problem, and so do we. And we believe this agreement can contribute to that cause.

The final benefit will be that American firms will be, for the first time in three decades, able to invest in India's nuclear industry. American companies have the finest nuclear technology in the world, and we are looking forward to American firms having the opportunity to bring their latest technology to the Indian market. We are confident that American companies will have equal access to this huge market and that they will succeed there.

So in all respects, we believe this agreement is in the unquestioned national interest of the United States. To put it into effect, there are three remaining steps that need to be taken: first, India will now have to negotiate an IAEA safeguards agreement, and we hope that can happen as soon as possible; second, we will work together, along with many other countries in the Nuclear Suppliers Group, to help India gain access to civil nuclear trade with all the countries of the world; and third, when we have finished those two steps, President Bush will send this agreement to Congress, as he has promised to do, for a final vote by the United States Congress.

We hope that this can happen in the next several months. We are looking forward to it and we spent the greater part of this week briefing the leaders of the Congress and their staffs about the details of all this arrangement. We believe this great, historic civil nuclear agreement will become part of a new strategic partnership between our countries. We are ready to build that relationship with India. And by removing the real barrier that had separated us for more than 30 years, we're about to liberate our two countries for a new engagement.

Now, I would anticipate a series of high-level meetings between the Indian and American leaderships over the next several months. And I think now that we've consummated the civil nuclear trade between us, if we look down the road in the future, we're going to see far greater defense cooperation between the United States and India: training; exercises; we hope, defense sales of American military technology to the Indian armed forces.

Second, we know that both of us are victims of terrorism, and unfortunately we'll continue to be victims of terrorism, and so expanding our counterterrorism cooperation is a high priority for both of our governments.

Third, we want to work together to have a greater measure of global cooperation between us. We already are working together with India in South Asia on Bangladesh, on Sri Lanka, on Nepal, in trying to form a better functioning relationship between India and Pakistan. We're working together in a way we never have before.

This can become a global partnership where we work together in East Asia, in Africa, as the two -- well, as the largest democracy in the world and the oldest democracy in the world. So we think this agreement today unlocks the promise that we've known for 60 years is in the India-U.S. relationship, and now we can make that promise a reality.

So with that, I'll be very happy to take your questions, Carol.

QUESTION: In the Hyde Act, Congress made it very clear that if India were to test a nuclear weapon, that U.S. cooperation with India should cease. If you are giving India assurances that there will be no interruption in its fuel supplies, regardless of what happens, how does that comply with the law? And why does that advance your efforts to try to persuade India not to test again?

And on the reprocessing issue, the President has said enrichment and reprocessing is not necessary for a country to move forward with nuclear energy. Doesn't this repudiate that statement by him? And -- well, I just thought --

UNDER SECRETARY BURNS: Two questions. Thank you. (Laughter.) And I expect more.

First of all, we were very careful when we began these -- the latest phase of these negotiations to remind the Indian Government that since the President and Prime Minister had their two agreements of July '05 and March '06, something else had happened: The Congress had debated over six, seven months those agreements and the Congress has passed the Hyde Act. And so we had to make sure that everything in this U.S.-India civil nuclear agreement, the 123 Agreement, was completely consistent with the Hyde Act and well within the bounds of the Hyde Act itself.

When we briefed Congress this week, we said we were confident that was the case. And it pertains to both of your questions. And I'll take them one at a time.

On the issue of so-called right-of-return that, of course, the American President under our Atomic Energy Act has the right to ask for the return of nuclear fuel and nuclear technologies if there is a test. That right-of-return has been, of course, preserved as it must be under our law, and there has been no change in how we understand the rights of the American President and the American Government. It has been fully respected by this.

Now in March '06, when the President met with Prime Minister Singh in Delhi, he did -- President Bush offered four specific assurances to the Indian Government that we wanted to help it try to achieve a continuity of fuel supply. And those assurances are built in. The ones that we announced publicly in March 2, '06, are now built into the 123 Agreement. And they are very much consistent with the fact that we have a positive view of our future civil nuclear cooperation with India. We expect it to continue in a positive direction.

But, you know, when you write an agreement the way we have, and when you have legions of lawyers on both sides of the table, you also build in protection -- both sides do -- to meet your legal obligations. And so if there's ever any reason for the United States to have to invoke the right-of-return, we could certainly do so.

On the second question, on reprocessing consent rights, this was a major issue, in fact the principal major issue, in this last phase of negotiations over the last few months. The United States has committed in the past, in these 123 agreements, to confer reprocessing consent with Japan and with EURATOM.

We thought very hard about going down this road with the Indian Government. We decided to for two reasons. First, in late May, early June, the Indians came to us and said that they were ready to build a new state-of-the-art reprocessing facility that would be under IAEA safeguards and that any reprocessing of spent fuel would be done in conjunction with that new facility, fully safeguarded, fully transparent to the IAEA and to the United States and to the international community. That was a significant development in the negotiations.

Second, Section 131 of the Atomic Energy Act, of course, calls for subsequent arrangements in reprocessing, arrangements in procedures, that would need to be agreed upon before the reprocessing could actually take place. So with the new facility promised by India under IAEA safeguards and with the subsequent arrangements and procedures, we believe it's a deal that makes sense to the United States. It allows India to go forward in a way fully within the Hyde Act, to complete the kind of activities that it wants to undertake, but it allows us to do so in a way where we're fully protected, not only by our law, but also by the IAEA provisions for this facility.

This was -- these were two factors that were not in place a year ago. There was no talk of a new reprocessing facility a year ago. It has just been in the last two months that this has materialized. We looked at it very carefully and decided that, on that basis, we should go ahead, that it was in our interest to go ahead. And that is, as you'll see as we brief this more -- in more detail, that is fully written into the new agreement.

QUESTION: Can I just follow up? You're convinced, you're confident, that safeguards will prevent any diversion of fuel from this new facility to India's weapons program?

UNDER SECRETARY BURNS: Yes. As you know -- yes, we are.

QUESTION: I mean, because there are some people who think that that's not possible.

UNDER SECRETARY BURNS: We are convinced and we've written -- of course, both sides have committed, and of course the Indian Government has committed, to continuous safeguards.

Now, we had our eye on this question that you ask about a year and a half ago. And as you remember, the big development on March 2, '06 was the agreement of a separation plan that the Indian Government wrote that was built into the March 2 agreement that allows us with some confidence, Carol, to say that from the beginning, the agreement was always about civil nuclear cooperation, the agreement does not speak to India's strategic program. And of course, we cannot aid in the development of India's strategic program, but we can separate that program from the civil side and we can help India to take its country from a 3 percent reliance on nuclear power to something substantially greater in the future. And that will have economic benefits, technological and very strong environmental benefits for India. And that's in our interest.

Yes.

QUESTION: Just to clarify, I mean, does this reprocessing deal go against the terms of the congressional approval that was given in December?

UNDER SECRETARY BURNS: No, it doesn't.

QUESTION: And why -- and if it doesn't, then why was this only just -- because just two months ago and the deal was only -- the agreement was in December?

UNDER SECRETARY BURNS: Well, as you know, we've been negotiating this for two years and two days. It's been a long time coming. And of course, in any negotiation like this, there has been a cycle, there's been an evolutionary cycle to the discussions. It became clear following the passage of the Hyde Act that India wanted to see if we could reach an agreement on reprocessing consent rights. We wanted to see that there were developments involved or inherent in the agreement that would allow us to do so, but allow us to do so on a basis that was consistent with the Hyde Act. That was our obligation to the Congress.

And this promise by India to construct a new reprocessing facility, state of the art, safeguarded by the IAEA, I think was the fundamental positive turning point. But the Hyde Act -- what we are doing on reprocessing is fully consistent with the Hyde Act and, very importantly, with the Atomic Energy Act of 1954. And we wouldn't have agreed to it otherwise. That's been a very important framework for us that we already have, not only in the law from 1954, we have the Hyde Act. And we kept reminding the Indian side, and they were good enough to negotiate on this basis that anything we did had to fall within and respect the legal guidelines that Congress had set forth.

QUESTION: Nick?

UNDER SECRETARY BURNS: Yes, Aziz.

QUESTION: Nick, piggy-backing on the question on testing that was asked, the fact that the U.S. has in a sense assured India of sort of permanent fuel supplies, even if it were to test, isn't India only better because that the fuel supplies would still be assured even if the U.S. does withdraw its supplies a la Tarapur. So in a sense, India is assured that there won't be another Tarapur in future.

UNDER SECRETARY BURNS: Well, you know, it's hard for me to deal in hypotheticals. I learned when I was spokesman here ten years ago never to answer hypotheticals. But I think I understand the drift of your question, and it's consistent with where Carol was going with her question.

The fact is that American law insists that the right of return be preserved, and we have preserved that in this 123 Agreement with India. The fact is also that we hope and trust that it won't be necessary for India to test in the future, and we hope and trust that we can go ahead with full civil nuclear cooperation. And so the basis of this agreement is the positive affirmation that we seek to build full civil nuclear cooperation. But in the event of any kind of hypothetical disruption of supply, and there is lots of different hypothetical examples that might lead to an interruption of supply, we know it's important for the Indians to have a continuous supply of fuel. And that's why a year and a half ago President Bush offered the four fuel assurances that have been written into this law.

But none of that contradicts or conflicts with the legal right of any American President in the future to insist on the right of return. That's preserved. That's preserved. But that's preserved for the worst case hypothetical event in the future. What we expect is that we'll have full civil nuclear cooperation, that these hypothetical scenarios will not come into play over the next several years, and that we'll be able to build the kind of positive cooperation that these fuel assurances will help to bring about.

QUESTION: And you did say that this dedicated reactor was sort of a turning point.

UNDER SECRETARY BURNS: It was.

QUESTION: So it was during these negotiations that the real turning point --

UNDER SECRETARY BURNS: It was during -- Dick Stratford and I were in Delhi on June 1, 2 and 3 of this year, and it was a very intensive three days. And it was during those three days that the Indian Government approached us and said that they felt that they were willing to commit to this new facility. They knew that they had to do that in order to earn the reprocessing consent that we have subsequently given. And I think it was the fundamental turning point in these negotiations, and our experts took some time to look through the Indian proposal, and I think it did make a great, positive difference that allowed us to go ahead.

And the fact that it's going to be safeguarded by the IAEA, I think gets back to Carol's question that we can be assured that there is a separation and that when the United States does deliver nuclear fuel to India, we'll know what is going to happen to that fuel when it goes through the fuel cycle.

Yes.

QUESTION: This is like an India-specific deal. There'll be no similar deal offered to any other country?

UNDER SECRETARY BURNS: This is complicated enough, I can assure you, that the United States is not going to suggest a similar deal with any other country in the world. We've always felt of India as an exception.

We've made the argument that India has not proliferated its nuclear technology; that India, in effect, outside the system, has played by the rules and that the system would be strengthened by bringing it in. But we're not anticipating, in any way, shape or form, a similar deal for any other country.

QUESTION: But how --

UNDER SECRETARY BURNS: And that, I think, is important for the countries, the 45 countries, of the Nuclear Suppliers Group. Once the Indian Government succeeds with Mohamed ElBaradei in completing a safeguards agreement, then the action -- September, October, I hope, November -- will turn to the NSG. And I think it's important for the NSG countries to be assured that we're all going to be make, on an international basis, an exception for India, but we're not going to have -- it won't be a precedent to bring other countries in under the same basis, because India is unique in its history of its civil nuclear program, and we think that we're going to strengthen the NSG by having the international community take the same decisions that the United States has taken in leading this initiative.

QUESTION: But how can you prevent other countries, such as China and Pakistan, from making similar deals?

UNDER SECRETARY BURNS: Well, there's a very high bar in the Nuclear Suppliers Group. It's consensus. Every single one of the 45 countries has to agree. Now, we've been talking to every country in the NSG since 2005 about India. And I think we and some of the European countries will take the lead in arguing in the Nuclear Suppliers Group that this kind of treatment to liberalize the international regime and bring India into full civil nuclear cooperation should be given by every country. I don't think there's any other country out there who could be brought -- who's not in the NSG who could be brought into the NSG at this point and given the type of treatment that we hope India will be given.

Yes.

QUESTION: To talk about the reprocessing, would America consider selling or sharing reprocessing technology with India? Is that planned?

UNDER SECRETARY BURNS: Well, as you know, there are significant restrictions and major restrictions in American law that prevents the transfer of enrichment reprocessing technology to any country.

There are two exceptions listed in the Hyde Act, and on that basis we will work -- if India is interested, we will work to see if we could meet the tests of those exemptions in the Hyde Act, but obviously, under congressional purview.

It's important to remember that the Congress has the final say on all of this. When we get through the -- when India gets through the IAEA safeguards agreement, when and if the Nuclear Suppliers Group acts, and we hope it will, this thing goes back to the Congress for a final vote.

It's important also to note that when we begin to build this reprocessing initiative, the new state-of-the-art facility will be constructed by India, and then the subsequent arrangements and procedures will be agreed to by the U.S. and India, as we did with Japan, as we did EURATOM. Congress has the right to review that particular subsequent arrangements and procedures.

And so we have been briefing Congress this week. In fact, I will tell you that when we came -- when Ambassador Stratford and I came back from India on the 3rd of June, he and I spent a considerable amount of time on Capitol Hill, just making sure that everything we were doing was well within the Hyde Act before we made the final commitments to India last week when the Foreign Secretary and the National Security Advisor were here for those very intensive four days.

So the Congress has the right to review this and to approve it every stage, and that's only proper because this is a major initiative and a major departure from three decades of American practice.

Yes.

QUESTION: You talk about how this will strengthen the nonproliferation regime and then you also talk about how this is totally separate, the civil and the military --

UNDER SECRETARY BURNS: Military.

QUESTION: -- nuclear arsenal.

UNDER SECRETARY BURNS: Yeah.

QUESTION: Could you just explain in kind of layman's terms how this strengthens the nonproliferation regime because this really has only to do with civil nuclear power, not to do with the kind of issue of India as a nuclear -- as a nuclear -- military nuclear power?

UNDER SECRETARY BURNS: Well, the United States is a strong supporter of the Nonproliferation Treaty and of the international nonproliferation regime, the agreements that make up that regime. And, you know, it's -- as you know, there are a lot of inconsistencies that have now developed in that regime. You have countries inside the regime, like Iran, that are cheating. They have been cheating for the better part of the last 20 years.

In the case of Iran, they withheld information from the IAEA for 18 years. In the case of Iran, they haven't -- if you look at Mohamed ElBaradei's report to the Security Council of May 24th, they haven't answered major questions about what they're doing at Natanz, what they're doing with the Arak heavy reactor. So you've got this inconsistency of some countries inside cheating and of soon-to-be the largest country in the world, one of the largest energy consumers in the world -- India --on the outside, but not cheating.

And so we felt when Secretary Rice went to New Delhi in March of 2005, she talked to the Prime Minister, Prime Minister Singh. And she said we felt that over the long term, this nonproliferation system would be strengthened if India were brought into it, and if India would commit to inspection of the majority of its nuclear reactors by the IAEA for the first time. And that's essentially what we've worked out over the last two and a half years since her visit.

We are bringing India into the system. It's going to strengthen it in that respect. And I do think that the message to countries like Iran is, if you're not willing to answer questions from the IAEA, if you're not willing to be transparent about exactly what's happening at Natanz at that enrichment facility, then there's no chance whatsoever that the international community is going to treat Iran and give it the kind of benefits that we're certainly willing to give the Indian Government. So I think that's the fundamental lesson for the nonproliferation regime.

And on separation, we have been clear from the beginning, and we were after July '05, that we could not go forward -- we, the United States -- unless there was a clear separation between how we would work with India on the civil nuclear side and then separate that completely from what India does on the strategic side. And it was the separation plan written by the Indian Government, agreed upon on March 2, '06, that it is a fundamental basis of the entire project.

QUESTION: If I may just quickly follow up, these are -- these are not -- these kind of safeguards that they're agreeing to are through the agreement with you, but not -- they're not legally -- these are voluntary as -- according to the international nonproliferation regime.

UNDER SECRETARY BURNS: No, India has committed to safeguards in perpetuity; and India has committed that, at this point, 14 of its 22 nuclear power plants will come under international safeguards; and that all -- as we talked about a year and a half ago, all future breeder reactors will come under safeguards. And so these are IAEA safeguards, and when this new reprocessing facility is constructed, that will be under IAEA safeguards.

And so we're -- I think someone asked before, how can you be assured of continuous safeguards? Ambassador Stratford and his team were very keen to make sure that in the writing of this agreement, those safeguards will be in place in a way that we can be confident in.

QUESTION: Just very quickly one more time. But what I'm saying is, I understand what you're saying about the separation that they can't use one for the other, but their military nuclear arsenal, or anything, is not under international safeguards.

UNDER SECRETARY BURNS: No, I didn't suggest that. There's a complete separation. We work with India on the civil side; that is safeguarded. What India does on the strategic side is India's business. This agreement doesn't aid that program and it doesn't have an effect because we've cleanly separated what we do to be only focused on the civilian side, not on the military side.

QUESTION: Thank you. One specific question and one more general one. Specific one: On -- you talked about -- you will subsequently agree to the programmatic consent. So does -- is that within a specific timeframe or contingent on some other event taking place, or is it just a commitment to engage in negotiations that might lead to this?

UNDER SECRETARY BURNS: The way I would describe it, and the way that Dick and I talked to the Indians about this, is that to put into effect the consent rights requires the two things that I mentioned: the development of this safeguarded -- IAEA safeguarded reprocessing facility; and the subsequent arrangements and procedures that the two governments would negotiate. And, of course, that is the way we conducted the reprocessing agreement with Japan and with EURATOM.

So I think it's a very important -- the agreement is a very important signal to the Indian people that their country is being respected, that their country will gain the kind of rights that only a few countries have -- Japan and EURATOM -- with the United States, but it'll be done in such a way that will be fully consistent with American law and with our practice, as we've dealt with our ally, Japan, and our allies in Europe in decades past. We felt it was important to have that consistency and I'm confident it's been written into the agreement.

QUESTION: And the second more general question: As you said in the past, there's been a lot of divisiveness, and part of that was because the two sides interpreted the same provision and agreement differently. So is everything in this agreement so crystal clear that there is no ambiguity about it and that the Indian Government would endorse everything that you've said today as to how we should interpret it?

UNDER SECRETARY BURNS: Yes, I believe that is the case that you're going to find a consistency of presentation by both governments and a consistency of explanation of what we've agreed to. Now, what we'll both need to do -- I know the Indian parliament, the monsoon parliament, will come into session, I think, on the 6th or 7th of August. Our Congress, of course, will want to see this agreement and every detail of it, as it should. And so, when we're able to make the text available to the Indian parliament and the American Congress, we will, and at that point we'll make it public as well. The reason we can't do that right now is because we've got to complete our congressional consultations, but also, our President needs to -- we have a procedure here where the President needs to authorize the sending of the text to Congress. And so we'll do that.

But you can be assured that what we did once we got very close to an agreement last week -- the Indian Government was here from Tuesday through Friday at 2 o'clock, and we had nonstop, round-the-clock negotiations with Foreign Secretary Menon and the National Security Advisor M. K. Narayanan. Once it became clear that we knew what the elements would be, we actually did spend a lot of time together -- Foreign Secretary Menon and I -- in saying, okay, now, are we fully agreed on what each of these elements means, on what they are, on how they're linked to our law, and will we fully be able to then make sure that we're consistent in applying it?

And I'm confident we've reached that point. I've talked to the Foreign Secretary, I think, every day this week, including this morning, and he and I were very keen to make sure that when we presented this, we did it in way that was clear where American law kicked in, or Indian law, and what our respective obligations would be.

Yes.

QUESTION: Nick, you have portrayed this deal as a savvy decision and as worth undertaking, basically on, it seems to me, on two premises: one, that India has never represented a proliferation risk with respect to nuclear technology; and secondly, that it helps draw a useful distinction with a country like Iran. And yet I would like to introduce into the record of this briefing three facts which might tend to challenge those premises and have you respond to them.

First is that over the last two and a half years, the State Department has issued at least -- sanctions on at least seven separate Indian entities for transferring strategic weapons-related technology or goods to Iran, specifically. One of those entities was sanctioned last year for selling Iran chemicals critical to manufacturing rocket fuel. And finally, no less a figure in India than the former chairman of its state-run civilian nuclear program remains under State Department sanction for visiting Iran's nuclear establishment several times and reportedly transferring technology to extract tritium, which, as you probably know, is a material necessary to make smaller, more efficient missile-deliverable nuclear warheads.

And that -- all of what I've just said -- ignores the burgeoning military-to-military ties between India and Iran. So why should anyone view this deal as one that is savvy for the United States to make when, in fact, India under -- or entities in India remain under State Department sanction for sharing nuclear technology with Iran, and is, in fact, also expanding its military cooperation with Iran?

UNDER SECRETARY BURNS: Well, as you know, there is an American law that speaks to the prohibition on trade by any company or any government around the world with the Iranians. We apply that law. And it is true that some Indian firms have become subject to that law and we intend to apply the law, and there'll be no exceptions to it. And so we'll go forward on that basis.

But there's no indication that I am aware of that the Indian Government has been involved in any illicit activity and trade of nuclear materials with India. These are Indian firms that we've sanctioned. But we will apply the law and make no exceptions. That is our obligation.

I would disagree with you that somehow there's a burgeoning military relationship. Now, India -- like most of its neighbors, like all of our European allies, like all of our Asian allies, and like the Gulf states -- has a diplomatic relationship with Iran, has a commercial and trade relationship with Iran. Our advice to the Indian Government has been the same advice that we give to Japan or to France or to the United Arab Emirates. We think Iran is an outlaw state. We think the international community should sanction Iran through the Security Council, as we've done twice over the last nine months, and also through independent sanctions taken by individual companies -- countries, excuse me. We don't want to see a strong relationship between any country and Iran because we think the signal to Iran should be one of isolation. So our message to India is very much consistent with our message to all of our other friends and allies around the world.

Now, I know there is some connection between India and Iran militarily, as there is between other -- some of the other countries that I mentioned. We would obviously -- our advice, consistent with the Security Council sanctions, would be to diminish a country's military relationship with Iran. But I'm not sure, as an objective observer, I would say that there's a burgeoning relationship.

I remember when Secretary Rice testified before the Senate on behalf of the India civ-nuke deal, in the spring of 2006, and there was a flurry of stories in the press about an Iranian ship visit to India and that it was an example of burgeoning defense ties. And it turned out it was a ship -- you know, one of these mast -- one of these clipper ships with 16- and 17-year-old cadets learning how to sail.

I think, actually, the direction that India is turning into is to closer military cooperation with the United States. And as I said in my prepared statement, I think that is going to be one of the very significant horizons of this relationship.

QUESTION: May I follow up, please? First on the military ties, India has helped Iran complete a major naval facility and has conducted joint exercises with the Iranian navy. Whether you want to characterize that as burgeoning or not is your decision, but the follow-up question I wish to ask is: even if one is prepared to assume, charitably, that the Indian Government had no idea about the transfer of those technologies to Iran on the part of, for example, the former head of its civilian state-run nuclear program, what does it say for Indian end-use or export controls that those exchanges took place, and how trustworthy a partner does it make them for the kind of benefits that you're proposing?

UNDER SECRETARY BURNS: Well, two points. First, we have sanctioned, as you know, a number of firms from a number of countries around the world for illicit, and we believe prohibitive, transactions with Iran in the nuclear field. Second, when we approached the Indians in the spring of 2005 with this -- Secretary Rice did -- with this big idea to break through three decades of separation and to make this big strategic move to engage in civ-nuke cooperation, we did say to the Indians, you know, every country that's in the mainstream has to have a significant set of export control laws. And so you saw the Indian parliament pass such laws, I believe in June/July, if I'm not mistaken, of 2005, before Prime Minister Singh came to Washington.

And in part, we urged India to do that -- its government and parliament -- because we did perceive some weaknesses in their export control regime. But we believe that India has a counter for that. We believe India is committed to it. India has been a responsible country for a very long time, and if there are problems in the system, we believe the Indian Government will feel compelled to fix those problems.

QUESTION: Thank you.

UNDER SECRETARY BURNS: Thank you.

QUESTION: Mr. Secretary, as far as this development is concerned, the credit also goes to you and Secretary Rice. My question is that -- and you have been briefing the U.S. Congress. You think from the briefings that Congress is now satisfied, number one?

And number two --

UNDER SECRETARY BURNS: It's a big Congress. There are lots of people in it. (Laughter.)

You know, I think what's going to happen is this. Congress has a right and obligation to ask questions. Congress is going to want to see the fine print. Congress is going to want to have detailed briefings from myself, from Ambassador Stratford and his team. That's the way our system works.

We were very pleased that after a six or seven month debate -- on the op-ed pages, in testimony on the Hill in 2007 -- '6, excuse me -- Congress passed the Hyde Act by very large margins in the House and Senate with strong bipartisan support. And we hope to be able to earn that same vote -- and we'll have to earn it -- when the 123 Agreement comes back to Congress, hopefully by the end of this calendar year.

We know that we have to convince Congress that we've been attentive to the concerns that Congress clearly expressed in all those hearings that Secretary Rice and I did. We know that the Hyde Act is American law and we have to be inside the Hyde Act in every respect. And I'm confident we are, and I'm confident we'll be able to put that case forward.

But I don't want to speak for the Congress. It's an independent branch of government. This is a very big step, and Congress is going to look at it very closely. And so -- but I'm confident and I know Secretary Rice is confident that we've done the job that we had to do and that we think we can earn that support and trust from Congress.

QUESTION: Something just to follow quick, Mr. Secretary. I will say this agreement came into effect during Prime Minister announcing and President Bush. Indians and India were feeling that they will have little cooler summers soon. How soon can they feel now that this agreement will make effect on Indians and India?

UNDER SECRETARY BURNS: Well, I think the point of this is that we know India is a rising power in the world. We know it has major energy needs that have to be met as its economy expands by 8 to 9 percent a year, which is quite extraordinary. And we know it needs to diversify its energy sources.

Now, this is a very complicated agreement. As I said, I think the chronology is that we're probably, probably not going to see this agreement go to the Congress until the IAEA and NSG steps are taken, hopefully by the end of this year. Once the Congress -- if the Congress approves it, and we hope it will, then at that point American companies can begin to, for the first time in decades, compete for contracts, for nuclear weapon -- nuclear reactor -- excuse me -- design and construction for nuclear fuel. (Laughter.)

And then if we're going to take the reprocessing forward, that's going to take some time because this new facility will be constructed. We'll have to agree on a subsequent set of arrangements and procedures. So there is a long timeline to this, but the benefit is going to be quite substantial in the future.

Yes.

QUESTION: On the strategic reserve that you will be supporting in this agreement, how does that square with the statement of policy in the Hyde Act which says that the U.S. will not really encourage other countries to supply fuel to India if, in fact, they do revoke the fuel?

And secondly, in the NSG, would the U.S. be amenable to an agreement whereby other countries would still be able to provide fuel to India if the U.S. did, in fact, revoke fuel?

UNDER SECRETARY BURNS: Well, first of all, you know, you write an agreement and you negotiate an agreement because you have a positive view that the full cooperation is going to take place and that we're not going to have these extreme hypothetical situations develop in the future. You write from that basis. In that spirit, the President offered the fuel assurances on March 2, 06 and they're written into the agreement.

But you also negotiate -- you also negotiate from a legal perspective with the worst case in mind. And so, of course, the worst case would be that the right of return would have to be invoked. And we had to protect that on a legal basis, and we have done so. I don't see an inconsistency there. There isn't an inconsistency.

What I presume will happen over the next four or five years is that we'll go full speed ahead with India and the United States. If, in the future, some hypothetical situation arises that should knock that off course, then we have the legal protection that the Hyde Act demands and that American law demands.

Yes.

QUESTION: Has the Pakistani Government shared any concern vis--vis this agreement with you? Because some Pakistani nuclear experts have shared the concern that this will allow the freeing up of its own nuclear technology and resources of India towards the weaponization and acceleration of its nuclear weapons program. So do you think it will further lead to the nuclearization of South Asia?

UNDER SECRETARY BURNS: The what of South Asia?

QUESTION: The nuclear -- the acceleration of the nuclear arms program in South Asia?

UNDER SECRETARY BURNS: No, we don't expect that to be the case and we hope that's not going to be the case. You know, Secretary Rice made a fundamental judgment in the spring of 2005 that she felt it was important to, in effect, dehyphenate our relationship with India-Pakistan. For decades, the United States had tried to carefully balance every step with India and determine its impact on Pakistan and vice versa.

We have singularly important relationships with both countries, but they're very different. The relationship with India is based on this extraordinary growth of trade and investment between our private sectors. The fact that India has the greatest number of students here, 75-80,000, and the fact that we're going to do things with India - civil nuclear trade, democracy promotion worldwide, HIV/AIDS cooperation --that are going to be unique.

I testified on Pakistan the other day and said Pakistan was the most indispensable country in the entire world to the United States in our number one global priority, fighting al-Qaida, fighting the Taliban, fighting radical extremist terrorists groups. And so that relationship rests on that kind of cooperation which is very important to the internal stability of Pakistan and of Afghanistan.

And so we -- you know, we're going to proceed with very strong relationships with both countries. And both countries are going to look to the United States in different ways. And I think it's important to mention that as a way to answer your question, because obviously Pakistan has a past, in terms of nuclear proliferation which, with the A.Q. Khan network, was very troubling. India has a very different past, and therefore we construct a different future on that basis, on that particular activity, civil nuclear cooperation.

Please.

QUESTION: (Inaudible) new reprocessing facility and when you do you expect it to be finished? Is this a U.S. --

QUESTION: (Inaudible.)

UNDER SECRETARY BURNS: It's India's responsibility. Yeah. No, no, we didn't --

QUESTION: There's no contribution from the U.S.?

UNDER SECRETARY BURNS: Dick and I didn't agree to pay anything towards this facility. This is an Indian facility. And the safeguards are going to be from the IAEA. And so just as the United States would pay for any facility that we built in our country, we expect the Indian Government will cover that expense, and I assume the Indian Government believes it's worth it.

QUESTION: And when do you expect it to be finished?

UNDER SECRETARY BURNS: I don't know. I mean, you'll have to ask the Indian Government. This is going to be a major facility. It's going to be state of the art. It's going to be very new. So I don't know that the timeline will be on that.

QUESTION: (Inaudible) your timetable for Congress here?

UNDER SECRETARY BURNS: No. Let's take this -- that's -- thank you for asking that question. No. To get this agreement, the one we announced today, to the Congress requires IAEA safeguards and Nuclear Suppliers Group action. Then it goes to the Congress.

To exercise the reprocessing rights will be subsequently worked out by the development of the new Indian facility and by the arrangements and procedures that the U.S. and India would agree to. So that would be subsequent to the passage, hopeful passage, by Congress of the 123 Agreement.

QUESTION: But do you expect that Congress would put in some sort of provision that in case this facility doesn't materialize, the deal is off?

UNDER SECRETARY BURNS: Oh, I don't know. I can't anticipate what the Congress will do, but --

QUESTION: Do you want such a provision?

UNDER SECRETARY BURNS: Our hope is that Congress will look at this agreement and say well done, good agreement -- (laughter) -- we fully agree with the Bush Administration and let's go forward. That's our hope. Let's see what happens.

QUESTION: Well done. Good briefing.

UNDER SECRETARY BURNS: Thank you very much.

QUESTION: Allow me. Could the U.S. business get into it before this facility is completed and get a piece of the pie?

UNDER SECRETARY BURNS: Well, let's -- again, I mean, that's a very good question. If the Congress, and we hope it will, approves the 123 Agreement, then that would allow American companies to begin to engage in civil nuclear trade and investment and nuclear reactor design with India.

QUESTION: Because India --

UNDER SECRETARY BURNS: It's the reprocessing that depends on the other two factors, and I believe that's going to be subsequent. So the American companies will be able to go in and we're very anxious to have that happen because, as you've seen with our trade with China and with other countries around the world, American firms are doing very well in competing against other counties' firms for contracts.

Yes.

QUESTION: Do you think --

QUESTION: (Inaudible.)

MR. CASEY: Guys, excuse me a second. Let's just wait.

QUESTION: (Inaudible) NSG countries supply fuel to India, would India be expected to house that in the proposed IAEA facility?

UNDER SECRETARY BURNS: Well, I think that -- I think that's a very good question.

MR. CASEY: I let you get by one. (Laughter.)

AMBASSADOR STRATFORD: The answer is, is if anybody else sold material to India --

UNDER SECRETARY BURNS: I want Mr. Stratford to come up here. You should have a look at him. He is a person who has been negotiating these agreements for 20 years. He's our best national resource and expert. Take the floor.

AMBASSADOR STRATFORD: I interpreted the question to mean if other countries transfer fuel to India, would it be reprocessed in the same facility. And the answer is, is if they were to give permission for reprocessing, it has to be done under IAEA safeguards. That's a given.

If there's only one IAEA safeguarded facility -- namely, the new one -- that's where it would take place. This facility has to be dedicated to safeguards forever and for everything that passes through it. It does not have to be only dedicated to U.S.-origin material. It could be used for everybody else's as well.

UNDER SECRETARY BURNS: Great. Thank you.

QUESTION: In the negotiations with the Indians so far, have the Indians showed any willingness to accept any further notifications if Congress adds or changes something?

UNDER SECRETARY BURNS: That's a hypothetical question. We'll have to see what the Congress does. Thank you.

2007/647



Released on July 27, 2007

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