Will Government Expose Indian Poeple To Protect American Companies?

India’s desire to join the league of major world powers has led to a great deal of maneuvering in recent months that requires India to ignore hard-facts; Bhopal gas leak incident that killed thousands in 1984 and neighbors like China, Pakistan and Sri Lanka. Included in India’s strategic repositioning is the acquisition of sophisticated military equipment, enhancing a blue water navy with nuclear sub-marine, and developing a nuclear triad; all hallmarks of a twentieth-century global force.

However, while these types of machinations may bring India onto the world stage, success will come at a price that will make these perceive success meaningless. Relationships with Pakistan and China, already a delicate matter, will become even more frayed as India enters into negotiations with the US, not to mention the damage India’s government could do to its reputation with the Indian people, who stand to be affected by any policy changes.

During her visit to India last week, Secretary of State Hillary Clinton signed a deal allowing two US companies, General Electric and Westingouse, to build a pair of new nuclear power reactors at a cost of $10 billion. Before any contracts are signed, the US companies are asking the Indian parliament to pass legislation which would limit the companies’ liability in case of nuclear accidents.

These negotiations follow hard on the heels of a US-India nuclear deal, approved by the Nuclear Suppliers Group last year. This deal laid the foundation for India to buy nuclear power plants and other nuclear equipment, and to obtain nuclear fuel from abroad as a non-member of the Non-Proliferation Treaty.

It is interesting that only two parks are being built, as this means there will be no open bidding process. The fact that India has named only two sites for the nuclear reactors is considered political payback for the promotion of the US-India nuclear deal that was signed under the Bush administration.

Before this deal goes any further, Indian law needs to be modified to set limits on the liability assessed to American companies involved with any kind of nuclear development. Even in the United States, liability is limited to about $11 billion, whereas the damage caused by accidents at nuclear power plants are estimated to be in the hundreds of billions of dollars. US companies want similar liability protections, and it remains to be seen whether the Indian parliament will satisfy those requests.

Under current international law, the nuclear industry, or rather, state-owned nuclear enterprises, operate under sovereign limitation. In other words, Russian and French nuclear reactors can protected by the built-in liability insurance provided by their respective governments, since they are publicly owned. However, Westinghouse and General Electric are not accorded this same security, as they are privately owned. In an analogous circumstance, during the US-Russia negotiations over the use of Cold War plutonium, including surplus plutonium from weapons in Russian reactors, the failure to arrive at a liability agreement was the major stumbling block in the execution of the deal.

The Convention on Supplementary Compensation is a UN convention responsible for limited liability, and its aim is essentially to deny fair compensation. Basically, the US wants India to sign and ratify this convention as a precondition of their participation in the deal. This is a topic that has not been the subject of the domestic debate as of yet, because there were bigger barriers the governments of India and the US government had to cross. Now that those obstacles have all but been bulldozed, this issue of liability protection is bound to be quite politically sensitive. The text of the defense agreement has not been made public, and chances are slim that it will be made public in its full form. Nor do we know, as of now, the future locations of the specific reactor sites.

India’s posturing has the potential to inflame Indian-Pakistani tension, because India is now seen as a long-term strategic partner, whereas Pakistan is an ally, which role is effectively limited to fighting terrorism. Pakistan has genuine concern that once the US’ war on terror has run its course or the US has done whatever it needs to do in Afghanistan, Pakistan will recede into the background of America’s political agenda, similar to what happened at the end of the Soviet occupation of Afghanistan in 1989.

China will not be a silent spectator either. With growing influence in Sri Lanka and a long term partnership with Pakistan, China can easily contain India in the region. It is also important to note that while India feels elated with recent interactions with Secretary Clinton, Chinese delegation was being entertained by the US President Barack Obama in Washinton DC. There is much more at stake in Sino-US relations: as the world’s biggest developing and developed countries, China and the US share broader common interests and a cooperation foundation, and thus shoulder more important common responsibilities amid the current financial crisis.
 
India has undoubtedly made significant progress in past sixty years and that is mostly because it has put it’s people first. But, the compromises India is now willing make to get a seat at the ‘bigger table’ will make it’s people more vulnerable and it’s neighbor more cautious. When a Union Carbide plant in Bhopal had a leak on December 3rd, 1984, the plant released 42 tonnes of toxic methyl isocyanate (MIC) gas, exposing more than 500,000 people to toxic gases. 10,000 died within 72 hours, and it is estimated that 25,000 have since died from gas-related diseases. India is required to protect the US companies going forward by limiting their financial exposure from Bhopal or Chernobyl type incident.

The Bhopal disaster is frequently cited as the world’s worst industrial disaster: and, Indian government is trying to protect the US companies by reducing their liability.