Nuclear deal cements US-India ties

By Mike McCarthy and Tony Czuczka Dec 18, 2006, 23:45 GMT

Washington - US President George W Bush's signing of a law that allows US companies to assist India's development of nuclear energy has become the cornerstone of a policy aimed at solidifying ties with the South Asian nation and casting aside decades of frosty relations.

The US legislation reflects India's growing role in the region diplomatically and economically as the United States seeks to expand trade with the country of 1.1 billion people and counter China's growing hegemony. The deal's purpose is also to lower the burden on the world oil market by helping India meet energy needs with nuclear reactors.

The United States and India were foes during the Cold War and relations deteriorated in the 1970s when India began testing nuclear weapons. India's detonation of a nuclear bomb in 1998 heightened tensions with Pakistan, which followed by exploding a bomb of its own, and prompted Washington to enact sanctions on both countries.

After the September 11, 2001, attacks the United States lifted the embargoes in order to win support for the war on terrorism, and ties with India have since grown closer as US companies created jobs in the country and India emerged into one of the largest US trading partners.

India, the most populous democratic society in the world, also fits well into Bush's vision of spreading democracy.

'The United States and India are natural partners. The rivalries that once kept our nations apart are no more,' Bush said in a signing ceremony at the White House Monday. 'And today America and India are united by deeply held values.'

Bush agreed to share US technology and material with India during a meeting with Prime Minister Manmohan Singh at the White House in July 2005, but the pact took months of difficult negotiations to ensure it complied with Congress.

Under US law, the United States cannot help countries with nuclear energy who are not members of the nuclear Non-Proliferation Treaty. To get a congressional waiver, India promised to verifiably separate its nuclear energy and military programmes and subject the civilian reactors to international inspections.

Arms control experts have criticized the deal, worrying it might make it easier for terrorist groups or countries like Iran and North Korea to acquire atomic technology. Bush argued that by bringing India into the international fold, the deal helps prevent the spread of nuclear technology.

'After 30 years outside the system, India will now operate its civilian nuclear energy programme under internationally accepted guidelines and the world is going to be safer as a result,' Bush said.

Bush's drive to make India a US partner also has solid business reasons. The US civilian nuclear industry, led by Westinghouse Electric Co, is lining up to build power plants for the fast-growing country whose electricity need is expected to double by 2015.

Bush noted that India's economy has more than doubled in size since 1991, when market reforms were launched, and is one of the fastest-growing markets for US exports. A growing Indian economy is consistent with US interests, he said.

US merchandise exports to India were up 24 per cent in the first nine months of 2006 from the same period last year. Relatively low US net investment in India - last year's level of 8.4 billion dollars was half the level of US investment in China - underlines the potential for growth.

India's gradually opening consumer market is a huge prize for western retailers. The world's largest, US-based Wal-Mart Stores Inc, last month agreed to enter the fray next year in cooperation with India's Bharti Enterprises conglomerate.

US defence and aeronautics giants Boeing and Lockheed Martin are bidding to sell fighter planes to India's air force. In another sign of booming ties, US and Indian officials last year agreed to liberalize air travel and boost the number of flights between the two countries.

'Trade is good for both countries, and we're going to continue to work with India to promote free and fair trade,' Bush said Monday.