Trade plan would allow nuclear sales to India

Trade plan would allow nuclear sales to India
Critics call deal bad foreign policy

By Farah Stockman, Globe Staff  |  July 3, 2006 | Boston Globe
http://www.boston.com/news/world/asia/articles/2006/07/03/trade_plan_would_allow_nuclear_sales_to_india/?p1=email_to_a_friend

WASHINGTON -- Over the past six years, the largest consortium of businesses in India spent more than $1 million on fact-finding trips to India for US members of Congress, their staff, and spouses, and on lobbying Congress to pass a law that would fundamentally change India's relationship with the United States.

Last week, the efforts of the New Delhi-based Confederation of Indian Industry and a simultaneous lobbying campaign by American industrial companies paid off: Two key congressional committees approved a controversial plan to allow trade with India involving nuclear technology and other sensitive areas.

If the full Congress approves the plan, the deal would cement a historic new US-India alliance and open the doors to billions of dollars worth of high-tech and military sales to the South Asian nation. India will become the only country in the world to gain access to sensitive US nuclear technology without signing the Nuclear Nonproliferation Treaty and agreeing to give up its nuclear arsenal. In return, India would tighten its export controls and place some of its nuclear reactors under international inspections.

Supporters of the plan say it is a ``win-win" proposal, increasing business ties with one of the world's fastest-growing economies and strengthening nuclear safeguards in India at the same time.

But critics say billion-dollar business interests -- in the United States as well as India -- have trumped the decades-old policy of trying to get India to give up its nuclear weapons program. They point to the massive, behind-the-scenes lobbying effort by the Confederation and US businesses as proof.

``It is clear that business interests and US defense contractors and former US officials involved in South Asia policy have been working hard to push this deal," said Daryl Kimball, executive director of the Arms Control Association. ``History has shown that US nonproliferation policy has consistently been compromised by interests in maintaining good relations or expanding business ties."

President Bush backed the proposal as a way to allow India to buy civilian nuclear reactors from the West, helping it feed its ever-growing needs for power without resorting to pollution-prone conventional power plants. Bush administration officials say the deal also provides a host of strategic advantages, including building a lasting friendship with a rapidly growing democracy in Asia, as a check on China's growing influence.

But few deny that the prospect of business opportunities worth billions of dollars helped fuel the deal. For Indian entrepreneurs, it is an opportunity to make money on privatized nuclear power plants and buy high-tech equipment that has been restricted for decades. For US businesses, it is a chance to invest in India's rapidly growing energy sector, to sell supplies to Indian nuclear reactors, and -- for the first time -- to have a shot at large-scale military contracts.

The legislation approved by the committees would lift prohibitions on civilian nuclear trade with India. Selling nuclear equipment to India has been off-limits since it developed and tested a nuclear weapon in 1974 outside the Nuclear Nonproliferation Treaty. Poor relations and intermittent s anctions have prevented other kinds of military trade.

``I believe that all things being equal, we will get a considerable portion of the $20 [billion] to $40 billion in acquisition that the Indians plan on making by 2020," said Raymond Vickery, a senior adviser to the US-India Business Council, the US counterpart to the New Delhi-based Confederation, which is carrying out its own extensive lobbying effort.

Vickery said that congressional approval of the deal would give Lockheed Martin a reasonable chance to get a $4 billion to $9 billion contract to supply 126 combat fighter planes to India's Navy, a contract that India would have been unlikely to approve while sanctions were in place.

Westinghouse, whose nuclear division is based in Western Pennsylvania, could help India build a civilian nuclear reactor, and Atlanta-based General Electric would be well-placed to get a contract to supply India's reactors with nuclear fuel, Vickery said.

The business prospects have spurred the US-India Business Council, which represents 200 US businesses operating in India, to hire heavyweight lobbying firm Patton Boggs to work on the issue and hold strategy meetings about how to approach skeptics on Capitol Hill. Reports on the expenses of the American group's lobbying on India have not been filed.

But one of the quietest and most persistent efforts to influence Congress on India policy has come from the Confederation of Indian Industry, which represents some of India's most profitable companies. The group was among the top international organizations paying for congressional travel between 2000 and 2005, even though they were not registered to lobby at the time, according to a review of congressional disclosure records conducted by the Center for Public Integrity, a nonprofit research organization in Washington.

During that period, they paid more than $538,000 in travel expenses for trips by 19 Congress members, 11 spouses, and 58 congressional staffers, according to the records.

The group spent the most money on travel for Representative Jim McDermott, a Washington Democrat, and his staffers, whose four trips to India cost about $40,955. McDermott, a cofounder of the Congressional Caucus on India and Indian Americans, has not taken a formal position on the India nuclear proposal, according to his spokesman, Michael DeCesare.

DeCesare said the 2004 trip to India was intended to discuss AIDS in workplaces, and McDermott was not approached at that time on the nuclear issue.

Foreign organizations and governments are allowed to lobby the US government, but they must register with federal officials.

Of the 50 members serving on the House Foreign Relations Committee, eight had trips to India paid for by the Confederation, traveling or sending a staffer. One of the eight, Representative Barbara Lee, a California Democrat, voted against the proposal last week when the committee overwhelmingly approved the deal.

In April 2005, the Confederation registered to lobby for the first time, paying Barbour Griffith & Rogers , a well-connected lobbying firm, $520,000 to lobby US government agencies, including Congress, the White House, the State Department, and the Department of Defense.

Robert Blackwill , who served as ambassador to India and deputy national security adviser under Bush, was hired by the firm to run the effort. A former foreign policy staffer for Senator Chuck Hagel assisted. In September 2005, the embassy of India also hired the firm, paying $240,000.

Businesses on both sides of the ocean have advocated closer US-India ties for years. But the issue of India's nuclear program always got in the way.

``It was like a cinder in our eye," said Frank Wisner , another former ambassador to India who once served as chairman of the US-India Business Council.

Indian officials said the legislative deal will send a signal to businesses of a lasting alliance between the two countries and give a legal framework to their new relationship.

``There are going to be opportunities for investment and infrastructure and energy that are mind-boggling," said Raminder Jassal, deputy chief of mission at the Indian Embassy.

For decades, the United States and India distrusted one another. During the Cold War, India refused to take sides and embraced a socialist economy.

After its 1974 test, India refused US demands to sign the Nuclear Nonproliferation Treaty, which gives five countries, including the United States, a right to retain nuclear weapons but prohibits others from developing them.

US efforts to contain India's nuclear program carried a price for US businesses. For instance, General Electric had to stop supplying nuclear fuel to Indian reactors.

By the early 1990s, when India moved to a more capitalist economy, trade flourished. But in 1998, India tested a nuclear device again and Congress responded by cutting off everything from the sales of high-powered computers to World Bank loans and engine parts for India's emerging space program. Indians resented the US sanctions, feeling as though the United States refused to acknowledge their country had become a world power.

President Clinton took steps to repair the relationship, but Bush has taken the effort further. He lifted the 1998 restrictions on India and launched a dialogue about military and economic cooperation, including a forum with American and Indian executives.

In 2005, Bush hosted Prime Minister Manmohan Singh of India at the White House and announced that he would initiate civilian nuclear cooperation .