Nov. 4: US President Barack Obama’s political setback in the midterm election in the United States is likely to harden his administration’s resolve to extract what it can in relation to economic contacts, trade and investment during the US leader’s three-day trip to India commencing Saturday.
This can produce tough bargaining on the issue of the US supply of nuclear materials, including civilian sector reactors, that the Indian power sector needs to produce clean energy on an extended scale.
The pressing US perspective specific to the present juncture is of expanding the American job market. Slow movement of job opportunities is widely thought to be the reason for the weak showing of Mr Obama’s Democratic Party in the mid-term election.
If the President is to bounce back from the trough, and not be seen as a one-term President, he would have to fix the employment situation when unemployment rages at nearly 10 per cent.
It should be no surprise if the American negotiators choose to leverage the supply of nuclear materials, which would require the easing by India of the onus on American suppliers in the matter of liability relating to accidents, with the lifting restrictions on the export of US exports of high-technology, dual-use items, and freeing important Indian institutions from the so-called “entities” list.
In an interview to PTI in Washington before his India visit is to commence, Mr Obama called the prospect of easing of US export restrictions of dual-use technology to India a “difficult” issue. This translates to hard bargaining, not necessarily to the subject being a closed matter for now.
The Indian Parliament recently passed the nuclear liability law under which international suppliers of nuclear materials bear some of the liability in specified situations.
India also last week signed the Supplementary Compensation Convention, which was the last of its obligations flowing from the India-US civil nuclear agreement of 2005, inked during the term of President George W. Bush.
Ordinarily, this should have sufficed for companies like GE and Westinghouse to get nuclear supplies ready for the lucrative Indian market.
However, the US believes the Indian law is too tough on potential suppliers and this country signing the international convention is not sufficiently reassuring. The Indian position is the opposite.
In the event, the two sides need to find creative politics and language — even if not during the President’s visit, but quickly enough — to move forward in this area, which has the potential to become an impediment in the bilateral relationship. If a satisfactory formulation can be found, the US job market will benefit.
India can get supplies of nuclear components and materials such as reactors from Russia and France, but Washington could possibly lobby these countries to hold back.
The export of dual-use technology, denied to India over the decades when the two countries were on different strategic trajectories, can also be linked to the satisfactory resolution of the nuclear liability question.