AUSTRALIAN URANIUM AND INDIA: IDEOLOGY VERSUS PRAGMATISM

"By all means let us talk of regulation of armaments—universally; by all means let us talk of non—armament—universally; by all means let us talk of arms restraint and arms control—universally. But any ... tendency to talk only in terms of imposing non-armament on some countries ... is to use an American phrase 'counter productive'. "

-Ambassador V. C. Trivedi, Indian Delegate to the Eighteen Nations Committee on Disarmament, on July 18, 1967.

“In the case of uranium, there is fundamental policy mismatch between Australia and India. It is not a position directed against India. It is our position that we hold that we do not supply uranium to countries that are non-signatory to the non-proliferation treaty.”

-Australian Minister, Simon Crean to journalists, New Delhi on May 4, 2010.

Abstract

It is no exaggeration to say that the sale of uranium is the most important outstanding issue in the Australia-India bilateral relationship. Everyone agrees it should and will take place. No one is sure when that will be.

This study offers a detailed look at the issue with the aim not merely to record events over the past decades, but to provide an overall sense of where this policy is heading.It also looks at where and why errors were made in policy so that contemporary and future efforts have the benefit of a clearer historical record. The survey is based on analysis in Australia, India and the United States and the scholarly work of Australian, Indian, Canadian and American experts on the subject.An attempt has been made to answer some of the questions arising from this research.Is Australia’s policy of not selling uranium to India sustainable?What lasting impact has the policy had on India-Australia relations?

This paper does not seek to argue the merits of the sale of Australian uranium to India nor does it look at whether nuclear power in India will lead to energy security. Rather it looks at the sustainability of Australia’s inconsistent policy under a new regime of climate

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change, economic growth and growing bilateral relations between two democracies with shared interests.

Is Australia’s policy of not selling uranium to India sustainable?

Australian governments grappling with the competing demands of a mining industry, issues of proliferation and the environment lobby.

Uranium deposits in Australia were known to exist since the 1890’s but the systematic exploration for it did not begin until 1944. In 1948, the Australian government even offered tax-free rewards for the discovery of uranium ore bodies and nearly five years later the first uranium mine was opened in Rum Jungle in the Northern Territory. This was followed by Radium Hill in South Australia and Mary Kathleen in Queensland. By the sixties, as the development of nuclear power began to take off worldwide, a second wave of exploration discovered uranium deposits in the Northern Territory. These included Ranger, Narbarlek, Koongarra and Jailuka.

Successive governments (both Liberal Coalition and Labor) approved uranium mining in these locations. The Australian Labor Party (ALP) went to the polls in 1971 committed to the establishment of a domestic uranium enrichment and nuclear power sector. Five years later that policy changed as the anti-nuclear movement gained strength.

By 1977, the ALP committed any future Labor government to a moratorium on uranium mining and treatment and to repudiating any commitments to mining, processing or export made by a non-Labor government. By 1982, the ALP sought a compromise between those who wanted to shut the industry down and those who felt that doing so was neither possible nor in the national interest.

It committed Labor to a policy on uranium mining which was a classic political compromise, the core of which endured as Labor policy for 25 years. The policy was designed to prevent new uranium mines; limit Australia's uranium production with a view to the eventual phasing out of mining altogether; and provide moral leadership in ending the nuclear industry.

But in a clever bit of compromise, the policy contained an amendment which said that the Labor government would "consider applications for the export of uranium mined incidentally to the mining of other minerals on a case by case basis".

This was the so-called ‘Roxby Downs amendment’, which would allow export of uranium from Olympic Dam - a major copper and uranium deposit in South Australia. The irony is that the1982 anti-uranium policy actually ended up authorizing the development of the world's largest uranium mine!i

i World Nuclear Association, “Australia’s Uranium,” January 2010. Accessible via http://www.world-nuclear.org/info/inf48.html (accessed June 9, 2010).

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In the 1983 federal election the ALP won office. The 1984 ALP National Conference then dropped the language of moratorium but for the first time announced what would be known as the ‘three-mines-policy’. The Labor Party named Nabarlek, Ranger and Roxby Downs (Olympic Dam) as the only projects from which exports would be permitted. Provisional approvals for marketing from other prospective uranium mines were cancelled. This ‘Three Mines Policy’ only allowed exports from existing mines and prevented the establishment of new ones. This policy survived for nearly a decade and a change of government, until 2007 when Kevin Rudd managed to get his party to abandon it.ii

Australia’s relations with India on nuclear issues didn’t get off to a good start. On many levels the relationship hasn’t moved forward very much since the 1950s. In the late 1950’s Australia missed a vital opportunity to engage with India on nuclear disarmament. As global dialogue on disarmament was beginning to take shape, Pandit Jawaharlal Nehru, India’s first prime minister, invited Australian Prime Minister, Robert Menzies to join the Eighteen Nation Disarmament Committee or ENDC. Menzies apparently refused.iii

After years of negotiations within the United Nations, between the United States and the Soviet Union, the ENDC was set up by the General Assembly in 1961 as an autonomous body to look at disarmament issues. The superpowers, after a great deal of talk, invited eight non-aligned states to join the committee. These were India, Brazil, Burma, Ethiopia, Mexico, Nigeria, Sweden and the United Arab Republic.

The predecessor to the ENDC was the Ten Nation Disarmament Committee which included five nations from the West namely, Canada, France, Italy, the UK, and the US. Bulgaria, Czechoslovakia, Poland, Romania and the Soviet Union made up the rest from the Eastern bloc.iv

Nehru was, at least in public, advocating a total ban on nuclear weapons. He firmly believed that the world would be a better place without nuclear weapons. And he wanted Australia to join the disarmament dialogue. But Australia and Menzies had other concerns. Since 1952 Australia had allowed the UK to test its nuclear weaponry in Australia, in part to secure a guarantee that British atomic bombs would be used to defend Australia.v The non-aligned movement’s opposition to atomic bomb testing ran contrary to Australia’s policy and one can understand Menzies’ reluctance to accept Nehru’s invitation to join the ENDC.

ii Glenn Milne, “Australia Abandons ‘Three Mines’ Policy,” Perth Now, April 27, 2007. Accessible via http://www.perthnow.com.au/news/top-stories/labor-abandons-three-mine-policy/story-e6frg12l-1111113430704 (accessed June 9, 2010).

iii Richard Broinowski, Fact or Fission: the truth about Australia’s nuclear ambitions, Victoria, Australia: Scribe Publications, 2004. Chapter 4, Page 92.

iv  Dimitris Bourantonis, “Democratization, Decentralization, and Disarmament at the United Nations, 1962-1978,” The International History Review, Vol. 15, No. 4 (Nov., 1993), pp. 688-713. http://www.jstor.org/stable/40106792 (accessed June 9, 2010).

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Menzies’ response may also have had something to do with his world view. The two men did not get along and their testy relationship set in train events that have shaped India-Australia nuclear cooperation since. vi

The Bandung Conference, a precursor to the Non-Aligned Movement (NAM) did not help matters. It was the first important Afro-Asian Conference of newly independent, former colonial states. Organised by Indonesia, Burma, India, Ceylon (Sri Lanka) and Pakistan it was viewed with suspicion by the western powers. Australia in particular felt threatened by the emergence of the non-aligned movement at its doorstep. It also posed a challenge to the Menzies government’s plans for the defense of Southeast Asia.vii

Also by 1954, Nehru and Menzies had yet another issue to disagree over. The Southeast Asia Treaty Organization (SEATO) was signed into existence in September of 1954. Primarily created to block further communist gains in South East Asia, it was at its heart a military alliance completely at odds with the goals of the Non-aligned Movement. The Indians were not happy with SEATO, pointing out that most of its members were white nations of the Western tradition. Only three member states were Asian members, one of which was Pakistan, which was in the organization for protection against India.viii

Oddly enough, by July of 1959, India and Australia came close to purchasing Australian uranium. Then foreign minister, Richard Casey, approved the sale under certain conditions including that the uranium must only be used for peaceful purposes. A year later, Rio Tinto Mining Company agreed to supply India with 400 tons of uranium oxide. But eventually the deal fell through because India refused to allow inspections of its nuclear facilities. ix In July of 1968, the Non-Proliferation Treaty (NPT) was brought into existence and entered into force by the 5th of March 1970.

India refused to sign the treaty claiming it was discriminatory and four years later exploded its first nuclear device. What little leverage India had with Australian uranium miners evaporated after this incident. The world’s nuclear establishment shut India out and Australia was no exception.

In 1975 Australia’s parliament established an inquiry into uranium mining in the country. Headed by Justice Russell Fox the report, also known as the Ranger Inquiry report, recommended among other things that Australia should develop and export its uranium if proper regulations and controls were imposed on its mining. It also recommended that uranium should not be sold to countries who were not signatories to the NPT.x

viii Ibid. Notes from a conversation between P Ratnam , the Indian High Commissioner to Canbera and Jim Plimsoll, a first assistant secretary in the Department of Foreign Affairs quoted by Christopher Waters. The full record of this is available in AA, CRS A1838/278, file 3002/1 Part 2.

ix Richard Broinowski, Fact or Fission: the truth about Australia’s nuclear ambitions, Victoria, Australia: Scribe Publications, 2004. Chapter 4, Page 94.

x Parliament of Australia, “The Fox Report,” July, 1975. Accessible via

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Successive Australian governments have followed this last recommendation with a bi-partisan fervor not seen in many other areas of domestic or foreign policy. The view from India is quite different. They point to, what they believe are, two major flaws in that claim. The first is France and the second Taiwan.

FRANCE

Until the August 3, 1992, France was not a signatory to the Nuclear Non-Proliferation Treaty. xi As early as 1955, France had expressed interest in buying Australian uranium. After the Australian government decided to accept the recommendations of the Ranger Inquiry, selling uranium to France suddenly became an issue.

In May of 1977, Australia’s Ambassador in Paris, H.D Anderson set about laying the ground work for France to be treated as a separate case. Writing to his masters in Canberra, Anderson argued that France had a huge requirement for uranium to fuel its growing nuclear power industry. His dispatch indicated that the French Foreign Minister Louis de Guiringaud had told him that large purchases of Australian uranium would add a new dimension to the bilateral relationship, and that while France was not a signatory to the NPT it was more conducive to non-proliferation than those other nuclear weapon states. France was, he continued, willing to give Australia whatever safeguards, assurances or undertakings it might require, and in particular guarantee that any uranium sold would be used exclusively for peaceful purposes. Anderson went further. Australia, he said, would invoke a ‘severe psychological reaction’ from a people who wouldn’t understand how Australians could deprive them of a crucial source of energy after defending them in two world wars. He continued, France could use its influence to punish Australia in the EC and at the UN and could make Australia suffer by withdrawing investment or by refusing to share its nuclear technology. xii

The tactic worked. Between 1981 and 1988 a total of 10,858 tonnes of uranium oxide was produced at the Nabarlek mine in the Northern Territory. Uranium from Nabarlek went to Japan, Finland and France.xiii

What gives these events even more resonance is the fact that successive Australian governments have attempted to oppose French nuclear activities in the South Pacific. Until 1972 France had conducted no fewer than 31 atmospheric nuclear explosions in the region. The Whitlam government, sensing public disquiet over nuclear testing in their backyard, joined New Zealand in a case against France at the International Court of Justice at The Hague. Australia also made the symbolic gesture of sending an Australian naval vessel to support a New Zealand frigate into the French test area. The action in the ICJ didn’t have much of an impact.xiv In 1983, the Labor government banned uranium exports to France because of its nuclear testing in the South Pacific. The ban was lifted in 1986.

http://www.aph.gov.au/Senate/committee/uranium_ctte/report/c01-1.htm (accessed June 9, 2010).

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France then went one step further. In 1995, three years after declaring a moratorium on testing, France conducted a series of tests in the South Pacific. Australia once again, along with New Zealand, took France to the International Court of Justice and recalled Australia’s ambassador to that country. Diplomatic pressure aside, the Labor government appeared to miscalculate the amount of public anger the tests generated in Australia. At least one organization felt that the Australian reaction to the French was soft.xv Indeed when questioned by reporters about Australia’s continued dealings with the French, then foreign minister Gareth Evans said: “What am I supposed to do, spit in the Ministers eye, stamp on his foot, thump his chest with my elbow?”xvi

His comments in Japan, a day after the first French test took place in the South Pacific have dogged him ever since. The decision, he said, though not expected, was ‘deeply disappointing, would undermine the respect and credibility that France has been rebuilding for itself in the South Pacific…it could cloud the CTBT negotiations and reinforce….the skepticism of those opposed to the Nuclear Non-Proliferation Treaty.’xvii His government he claimed had done all it could. In fact, by 1988 the Labor Party had once again resolved not to permit any further uranium contracts with France. It went further in 1994, banning contracts until France signed the Comprehensive Test Ban Treaty (CTBT). Hence when France resumed testing in 1995, Canberra did not have much leverage with Paris.

So after the diplomatic protests, the case in the International Court of Justice and a ban on uranium sales to France, normal relations between the two countries resumed. By October of 1996, barely a year after the tests in the South Pacific, Australia resumed exporting uranium to France.xviii

Today, Australia exports about 3500 tonnes per year to the EU, much of it to France which generates 77-percent of its electricity via nuclear reactors.xix By the time France singed the NPT in 1992, Australia had become one of its preferred uranium suppliers. A fact not lost on India.

TAIWAN

Taiwan is not a signatory to the NPT. As of today, Australia exports roughly 500 tonnes a year to power 6 reactors that supply 20-percent of Taiwan’s electricity. xx

The export of Australian uranium to Taiwan is instructive. In July of 2001, the United States and Australia entered into an “Exchange of Notes Constituting an Agreement between Australia and the United States of America Concerning Cooperation on the Application of Non Proliferation Assurances on Retransfer to Taiwan.”xxi This agreement

xviii Ian Hore-Lacy, “Australia’s Faltering Uranium Revival,” World Uranium Association, 1999. Accessible via http://www.world-nuclear.org/sym/1999/horelacy.htm (accessed June 9, 2010).

xix World Nuclear Association, “Australia’s Uranium,” January 2010. Accessible via http://www.world-nuclear.org/info/inf48.html (accessed June 9, 2010).

xx Ibid.

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in effect allows for the retransfer of Australian uranium to Taiwan via the United States after enrichment for use in nuclear reactors for the generation of electricity. The Agreement notes that “Australia agrees that the United States of America may retransfer to Taiwan uranium ... (that)has been enriched in the United States of America in the isotope U-235 to enrichment levels normally required for the generation of electricity.”xxii

In 2006, Taiwan’s electricity producer Taipower signed a deal with Australian mining giants BHP Billiton and ERA to supply it with uranium.xxiii

Australian diplomats and politicians dismiss this comparison with India describing it as “unsophisticated”.xxiv They point out that Taiwan was a signatory to the NPT before 1972, but has been unable to be a formal party to the treaty since losing its status as a member of the UN. Additionally they point out that Taiwan continues to fulfill its obligations under the treaty.xxv

They further argue that all nuclear facilities on Taiwan are subject to a non-governmental safeguards agreement with the International Atomic Energy Agency. Taiwan’s nuclear safeguards come under a trilateral agreement between Taiwan, the United States and the International Atomic Energy Agency. Thus the IAEA applies safeguards in Taiwan to all nuclear material and nuclear facilities as if it were an NPT non-nuclear-weapon state Party; it conducts regular inspections including Additional Protocol verification activities.xxvi

But Indian diplomats point out that at the very least it shows an inconsistency in Australia’s continued reluctance to sell uranium to one of its closest and strategically important friends in the region. They point to the fact that in Taiwan’s case, not only does Australia have to work around the fact that it is not in the NPT, it has to go via the United States to supply uranium to Taipei. Canberra also has to deal with the diplomatic fallout of this policy with Beijing.

This dichotomy that the Indians repeatedly refer to is a long standing one. In September of 1982, the Australian parliament held a debate on the efficacy of uranium sales to the world. No one put the Australian inconsistency better than Lionel Bowen, deputy leader of the opposition Labor party when he said:

We sell to France which is not a signatory of the Nuclear Non-Proliferation Treaty. France sold uranium to Iraq which was using it in a reactor enriched to weapons grade…. the fact is that France now uses our uranium as a buffer stop to do what it likes, whether it is to explode uranium in the Pacific or anywhere else… Is the government really thinking that it is helping world stability? xxvii

xxi United Nations, “Exchange of Notes Constituting an Agreement between Australia and the United States of America Concerning Cooperation on the Application of Non Proliferation Assurances on Retransfer to Taiwan,” Vol. 2208, I-39243. Accessible via http://untreaty.un.org/unts/144078_158780/5/2/12768.pdf.

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His views changed somewhat when his party was voted to power, but the powerful left faction within the Labor party continues to repeat this argument. Fast forward several years and in 2006, Colin Barnett, then a member of the West Australian legislature and currently the state’s Premier, picked up the theme of the confusion surrounding the states and federal stands over uranium mining. In a speech to the Australian Uranium Conference he said:

Queensland has a public position of not supporting uranium mining, yet it continues to issue permits for uranium exploration. South Australia opposes new mines, yet it supports the expansion of the Olympic dam mine and has not stopped the new Honeymoon mine. Western Australia has a ban on uranium mining but has failed to legislate as such, while continuing to grant uranium exploration licenses.xxviii

As far as India was concerned this dichotomy came to the fore during the Australian federal elections of 2007-2008.

After nearly 12 years in office, the Liberal Party led by John Howard went to the polls in late 2007. In foreign policy and strategic defense matters, Howard’s government was closely aligned to the United States. Hence when in 2006 the Bush Administration signed into law congressional legislation on Indian Atomic energy, all eyes were on the Howard government and what changes it would bring to its nuclear relationship with India. The early signs, however, were not good. On the eve of John Howard’s visit to New Delhi, his foreign minister Alexander Downer played down any change in Australia’s uranium policy with India:

Well our policy has developed over many years, going right back to the time of the Fraser Government actually, our policy has been that we would only export uranium to countries that are signatories to the Nuclear Non-Proliferation Treaty. If we were to export uranium to India, that would constitute a significant shift in our policy. I mean, it would open up questions of whether we'd export uranium to countries like Israel and Pakistan as well, and I think it's probably easier for us to support the current policy. It's probably better for us to give all the support we can to the Nuclear Non-Proliferation Treaty. And our view is we'd like India one day to sign that treaty, and we haven't withdrawn from that position.xxix

Yet in a stunning reversal, just a year later, his Prime Minster, John Howard decided to dismantle Australia’s 34-year old ban on uranium sales to India. Speaking to his cabinet colleagues, Mr. Howard said Australian uranium exports to fuel Indian civilian nuclear reactors “will assist India to pursue economic development while addressing environmental challenges and help bring India more fully into the non-proliferation mainstream.” He continued:

xxix ABC Radio, AM program, March 3, 2006. Accessible via  http://www.abc.net.au/am/content/2006/s1582991.html (accessed June 9, 2010).

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This change in policy is subject to - conclusion of a suitable safeguards agreement between India and the International Atomic Energy Agency (IAEA) covering all designated civil nuclear facilities; conclusion by India of an additional protocol on strengthened safeguards; consensus decision by the Nuclear Suppliers Group (NSG) to make an exception to its guidelines enabling international civil supply to India; conclusion of a bilateral civil nuclear co-operation agreement between India and the US; and satisfactory progress in implementing India's commitment to place designated civil nuclear facilities under IAEA safeguards in perpetuity.xxx

But this change did not last long. Australians were getting ready to go to the polls and the opposition Labor party was already preparing the ground for a return to the status quo. Labor's foreign affairs spokesman, Robert McClelland, repeated the Australian Labor Party’s stand and said the sale of uranium to India would undermine the nuclear non-proliferation regime. His leader Kevin Rudd went further, saying:

We respect the nuclear no-proliferation treaty and the International Atomic Energy Agency because we've got to prevent nuclear weapons proliferations in our region, our neighborhood, our own backyard. No one in Australia wants a nuclear arms industry aided by US, in the Indian sub-continent or between India and China, because we have failed to ensure the upholding of the NPT.xxxi

Kevin Rudd duly won the elections that year and Australia’s position on uranium sales to India returned to where it had previously been. Kevin Rudd’s assertion that India sign the NPT, if it wants uranium was dismissed by India. Indians have long described the treaty as a discriminatory one, some even suggesting it led to nuclear apartheid. In order to sign the NPT, India will have to arbitrarily dismantle its nuclear arsenal. For a country sandwiched between two nuclear neighbors, this is not a viable option.xxxii

There was yet another platform on which Australia’s inconsistency would once again be displayed. The Nuclear Suppliers Group (NSG) was formed in response to India detonating its first nuclear device in 1974. It comprises 46 members including Australia, China, Russia and the US and aimed to prevent nuclear exports for commercial and peaceful purposes being used to make weapons. For the Indo-US nuclear deal to go ahead, the Nuclear Suppliers Group had to be persuaded to lift the existing curbs on India. In other words India which had not previously met the NSG’S non-proliferation guidelines was now asking for a special exemption.

Initial reports suggested that Australia might vote against the deal given its stance on the NPT. Indeed Australian government ministers were non-committal in the days leading up to the NSG vote saying only that they would give it their “full consideration.”xxxiii Several other countries expressed concerns about providing an exception for India, most notably Norway, Sweden and Ireland. There was some suggestion that China would vote against the deal but in the end the NSG agreed to lift the 34-year old sanctions on India. The NSG vote was unanimous with Australia going along with the other member countries in

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agreeing to free up India to the world nuclear trade. But Australia still maintained the position of not selling India uranium because it was not a signatory to the Nuclear Non-Proliferation Treaty. This apparent inconsistency was not lost on either side. Australian Foreign Minister Stephen Smith sought to explain it in this tortured fashion.

The Indian Government is very pleased and very happy at the approach that Australia took in the IAEA (International Atomic Energy Agency) and NSG. India's long-standing position of not being a member of a Nuclear Non-Proliferation Treaty reflects our long-standing position of not exporting uranium to a country that is not party to that treaty. But it is just one issue of a raft of strength in our relationship.xxxiv

GOING FORWARD LOOKING BACK

What impact has this had on Australia India relations? Australia’s relations with India have been variously described as a tale of missed opportunities and chronic neglect.

Having been Australia’s Foreign Minister for 12 years, Alexander Downer in opposition claimed that India tends to dismiss Australia as a significant independent regional player.xxxv If that is the case, what exactly have successive governments of both persuasions done to change that perception?

For the past 24 years, no Indian Prime Minister has visited Australia. On the other hand, Australian Prime Ministers have made three visits to New Delhi in the past 12 years. This does indicate a desire from Canberra to move the relationship up to another level and a resistance to acquiesce from New Delhi. India’s reluctance stems partly from its view that Australia is not its own man in foreign policy.xxxvi A view, the Rudd government is fervently trying to dispel. In the past two years, both countries have had ten ministerial visits each. Australian Prime Minister Kevin Rudd visited New Delhi in November of 2009 and announced the establishment of a Strategic Partnership between Australia and India. Australia has been on the forefront pushing for India to become a permanent member of a reformed UN Security council and a member of the Asia Pacific Economic Cooperation or APEC. For its part India has moved for Australia to attend the South Asia Association for Regional Cooperation summit as an observer.

Trade between the two countries has also improved dramatically. India is likely to become Australia's third largest export market behind China and Japan. Two-way trade stands at $A22 billion, a 55 per cent jump on the previous year, making India Australia’s fastest growing major trading partner.xxxvii

But vital areas of difference remain. The Rudd government has been keen to rebuild its defence ties with India formally requesting Australia be allowed to participate in the annual India-US joint naval exercise Malabar.xxxviiiAustralia’s attempts to rejoin the Malabar war games exercise in the Indian Ocean has so far met with resistance from the Indians. The Malabar war games are an annual exercise held between Indian and American navies. In 2007, 25 ships from five countries including Japan and Australia

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were included. Since then these exercises have reverted to being restricted to the US and Indian navies. Australian military officials have been lobbying hard for their involvement in future exercises to no avail.

Also, Australia’s intelligence community, including the Office of National Assessments and the Australian Security and Intelligence Organization (ASIO), is struggling to recruit staff with expertise on India. The handling of the Australian Federal Police case against Indian doctor Mohammed Haneef in July 2007 is a case in point.xxxix Most diplomats posted to India get to learn Hindi only after they have been posted there.

The sustained and racially motivated attacks on Indian students living in Australia, is another issue that has slowed the progress of the bi-lateral relationship.xl 74 percent of Australians polled by the Lowy Institute, recently, believed that the attacks had led to real damage in relations between the two countries. Diplomats on both sides claim that much of their time has been wasted on procedural and consular issues of law and order as a result.

It appears that while India is currently basking in its emergent large power status, the relationship with Australia is not its top priority. A joint study on the feasibility of a bilateral Free Trade Agreement which was meant to have been finished by early 2009 has just been finalized. But privately many Indian diplomats have dismissed the possibility of a FTA in the near term. One diplomat went so far as to describe the India’s rating of Australia as “below Finland” in the order of importance.xli

Oddly enough, from India’s point of view, the Rudd government’s attempts to distance itself from a US centric foreign policy may have led to Australia unwittingly moving away from India. After all, the Howard government, following on from the India-US nuclear deal had agreed to sell uranium to India. The Rudd government by reversing that decision appears to punishing India, while attempting to chart an independent foreign policy course.

But can this policy be reversed? Three external developments may help shape the Australian government’s response in the coming months.One is climate change and the so-called nuclear renaissance, the second is the Indo-US nuclear deal. The third is India’s growth.

1. CLIMATE CHANGE

There is no doubt that the environment lobby in Australia has lost some of the clout it had during the sixties and seventies in its opposition to uranium mining. The Australian labor party, which for a long time opposed uranium mining, has today managed to overturn its longstanding ‘Three mines policy.’xlii Indeed Prime Minister Rudd has promised to expand uranium mining and export. But even before Kevin Rudd was elected to office the World Nuclear Association was seeing a surge in interest in uranium mining.

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Despite these restrictive policies and perhaps in anticipation of their disappearance, uranium exploration gathered pace during 2006, with more than 200 companies professing an interest, compared with 34 the previous year. Expenditure almost doubled, to A$ 80.7 million and has continued to increase since, to A$ 120 million in just the first six months of 2007-08.xliii

One important factor that has led to the resurgence of interest in the uranium industry is climate change.

Australian Prime Minister Kevin Rudd on the eve of his election described climate change as the ‘greatest moral challenge of the 21st century’.xliv His government has since committed itself to the Kyoto Protocol and been pushing for a Carbon Pollution

v . Christopher Waters, “After Decolonization: Australia and the emergence of the Non-aligned Movement in Asia, 1954-55,” Diplomacy and Statecraft, Vol. 12, June 2001.

vi See Meg Gurry’s excellent “Leadership and Bilateral Relations: Menzies and Nehru, Australia and India, 1949-1961,” Pacific Affairs, Vol 65, No 4 (Winter, 1992-1993), Published by: Pacific Affairs, Univeristy of British Columbia. Gurry goes on to describe Menzies’ attitude towards the newly independent India and its leader, Nehru. At one point Menzies describes Nehru’s use of the English language as “uses words to conceal the direction of the blow.” (Alan Watt, Australian Diplomat, Sydney, Angus and Robertson, 1972.Quoted by Meg Gurry).

vii Christopher Waters, “After Decolonization: Australia and the emergence of the Non-aligned Movement in Asia, 1954-55,” Diplomacy and Statecraft, Vol 12, June 2001.

xi US Department of State, “Dispatch Published by the Bureau of Public Affairs,” vol. 3, no. 32, August 10, 1992.

xii Paris dispatch from H.D.Anderson to Canberra dated 9 June 1977, FA file 720/5/5/4 France: Nuclear safeguards: Agreement with France. Quoted in Richard Bronowski’s,“ Fact or Fiction: the truth about Australia’s nuclear ambitions.”

xiii Paul Kay, “Australia’s Uranium Mines: Past and Present,” Parliament of Australia, May 8, 2003. Accessible via http://www.aph.gov.au/senate/committee/uranium_ctte/report/c07.htm (accessed June 9, 2010).

xiv France continued to test in the atmosphere until 1974 in the South Pacific. http://www.law.berkeley.edu/centers/ilr/ona/pages/testing2.htm - _ftn16 The French test sites on Mururoa and Fangtufa atolls were about 3700 miles east of Australia, and both Australia and New Zealand brought action in the International Court of Justice in an effort to bring a halt to the tests. http://www.law.berkeley.edu/centers/ilr/ona/pages/testing2.htm - _ftn17  The ICJ granted a preliminary injunction but then issued an opinion declining to rule on the merits, since France had issued a statement that it had “taken steps to [continue with only underground testing] as early as next year.” http://www.law.berkeley.edu/centers/ilr/ona/pages/testing2.htm - _ftn18  The Court indicated that Australia or New Zealand could re-open the case if France breached its commitment to them not to conduct such tests. http://www.law.berkeley.edu/centers/ilr/ona/pages/testing2.htm - _ftn19 

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Reduction Scheme or CPRS for Australian industry. He was also at the forefront of the Copenhagen talks on climate change and is seen, domestically, as a crusader for an Emissions Trading Scheme.xlv

Indians have long questioned Australia’s perceived stance on climate change against its policy of not selling uranium to that country. Delivering the India- Australia Strategic Lecture for 2008 at Sydney’s Lowy Institute for International Policy, Lalit Mansingh, who has served as India’s foreign secretary, High Commissioner to the United Kingdom and ambassador to the United States made this pertinent point:

xv GreenPeace, “France Testing New Nuclear Weapons – Australia Must Upgrade Protest,” July 14, 1995. Accessible via http://archive.greenpeace.org/comms/rw/jul14b.html. Greenpeace national nuclear campaigner Ben Pearson said: "Australia has clearly been deceived and needs to urgently strengthen its response given that the real purpose of these tests is now known to develop new nuclear weapons. "The development of new nuclear weapons by the French risks starting a new arms race and also undermines international talks on a comprehensive test ban treaty."

xvi Far Eastern Economic Review, August 3, 1995.xvii Keith Scott, Gareth Evans, Victoria, Australia: Allen and Unwin, 1999. P. 349.

Scott points out that those comments were taken up by the new Prime Minister John Howard who used it to argue that the labor governments response to the French tests were inadequate. This had an immediate bearing on India, which when it tested its nuclear devices in 1998 bore the brunt of an Australian government, which this time, over compensated in its response. This was confirmed earlier this year to the author by the then foreign minister Alexander Downer who said: “the Gareth Evans response to the French was seen as inadequate and so we felt we had to do something stronger.”

xxii Ibid.xxiii Craig Skahan, “Now Taiwan is Buying Our Uranium,” Sydney Morning Herald,

April 4, 2006. Accessible via http://newsstore.smh.com.au/apps/viewDocument.ac?page=1&sy=smh&kw=taiwan&pb=all_ffx&dt=enterRange&dr=1month&sd=04%2F04%2F2006&ed=04%2F04%2F2006&so=relevance&sf=text&sf=headline&rc=10&rm=200&sp=adv&clsPage=1&docID=SMH060404JRIBM36TQFJ (accessed June 9, 2010).

xxiv Author’s interviews. NAME? DATE?xxv Craig Skahan, “Downer Defends Uranium Sales to China’s Rivals,” Sydney Morning

Herald, April 5, 2006. Accessible via http://www.smh.com.au/news/national/downer-defends-uranium-sales-to-chinas-rivals/2006/04/04/1143916530272.html (accessed June 9, 2010).

xxvi World Nuclear Association, “Nuclear Power in Taiwan,” January 2010. Accessible via http://www.world-nuclear.org/info/inf115_taiwan.html (accessed June 9, 2010).

xxvii Parliament of Australia, House Hansard, September 22, 1982. Accessible via http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;adv=;db=CHAMBER;group=;holdingType=;id=chamber%2Fhansardr%2F1982-09-22%2F0047;orderBy=customrank;page=0;query=Bowen%20Uranium%20Decade

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[N]uclear power is the most promising source for India’s massive energy requirements in the future. Diverting India (and China) towards nuclear power will help reduce global pollution and maintain a measure of stability in oil and gas prices…. If Australia remains firm on not exporting uranium to India, it will appear to be out of step with the approach of the other leading nations of the world”.xlvi

There are other compelling reasons. India today has a modest and largely indigenous nuclear power program. By 2020 it expects to have 20,000 MWe nuclear capacity on line, and by 2032 it is pushing for 63,000 MWe. It aims to supply 25% of electricity from

%3A%221980s%22%20Year%3A%221982%22%20Month%3A%2209%22;querytype=Month%3A09;rec=2;resCount=Default (accessed June 9, 2010).

xxviii Colin Barnett, “Uranium: when politics gets in the way of development,” July 25, 2006. Address to the Australian uranium conference, Freemantle, WA, July 2006. (WA has since moved to allow Uranium Mining)

xxx Neena Bhandari, “Australia Allows Uranium Export to India,” August 16, 2007. Accessible via http://www.indiaenews.com/australia/20070816/65830.htm (accessed June 9, 2010).

xxxi “Labor Pledges to Oveturn Australia Uranium Deal,” ABC News, August 17, 2007. Accessible via http://www.abc.net.au/news/stories/2007/08/17/2007382.htm (accessed June 9, 2010).

xxxii Jaswant Singh, “Against Nuclear Apartheid,” Foreign Affairs, Vol. 77, No. 5 (Sep. - Oct., 1998), pp. 41-52. Council on Foreign Relations. Accessible via URL:http://www.jstor.org/stable/20049049 (accessed June 9, 2010).

xxxiii Natasha Chaku, “India, Oz to Address Uranium Sale Issue after NSG, IAEA Nod,” Chennai Online, June 23, 2008. Accessible via http://news.chennaionline.com/business/India--Oz-to-address-uranium-sale-issue-after-NSG--IAEA-nod/f9f86bf0-3749-406a-97a3-af6a058c4b58.col (accessed June 9, 2010).

xxxiv ABC Radio, PM program, September 9, 2008. Accessible via http://www.abc.net.au/pm/content/2008/s2360088.htm (accessed June 9, 2010).

xxxv Hamish McDonald, “India: Beyond the Sea Wall: Chronic neglect and Australia-India Relations,” The Asialink Essays, June 2009. Accessible via www.asialink.unimelb.edu.au (accessed June 9, 2010).

xxxvi Ibid.xxxvii Stephen Smith, “Ministerial Statement on the Australia-India Relationship,”

February 9, 2010. Accessible via http://www.foreignminister.gov.au/speeches/2010/100209_australia_india.html (accessed June 9, 2010).

xxxviii Amanda Hodge, “Stephen Smith Aims for India War Game,” The Australian, October 15, 2009. Accessible via http://www.theaustralian.com.au/news/world/stephen-smith-aims-for-india-war-game/story-e6frg6so-1225786865736 (accessed June 9, 2010).

xxxix Sushi Das, Age newspaper, July 23, 2007. Dr Mohammed Haneef is an Indian physician who was accused (wrongly) of aiding terrorists. He was arrested, thrown in

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nuclear power by 2050.xlvii In 2006 almost US$ 9 billion was committed for power projects. In the last five years that figure has gone up to US$ 51 billion.

In late 2009 the government said that it was confident that 62 GWe of new capacity would be added in the 5-year plan to March 2012. The Indian Atomic Energy Commission is even more ambitious, claiming that by 2050, half of all electricity will be provided by nuclear power. These figures may be speculative, but the fact remains that any target will require substantial uranium imports.

Currently India imports uranium from Russia, France, Kazakhstan, Mongolia, Brazil, South Africa and Namibia. It is in talks with Canada and several other countries as well. Any long term plan that involves the generation of nuclear power to the extent that the Indian Atomic Energy Commission is promising will require Australian uranium. In the short term, Indian diplomats argue they can do without it. But if India is looking for a credible, safe, stable supplier it cannot realistically dismiss Australia’s uranium reserves.

Climate change disproportionately threatens India. By 2045, India is set to become the most populous nation in the world. Currently it houses a third of the world’s poor. According to the Government of India’s National Communications (NATCOM), climate change will have an impact on snow cover, affecting snow-fed and glacial systems such as the Ganges and Brahmaputra. It will lead to erratic monsoons with serious impact on rain fed agriculture, rivers, water and power supply. It will result in a drop in wheat

prison and his visa cancelled amid great political controversy. Das continues: “The police struggle to understand Haneef's family connections. They also appear to lack a rudimentary understanding of basic terms. Haneef explains he is a Muslim. To work out if he is Sunni or Shiite, the policeman asks: "You said you were Islam, do you ascribe to any sort of strain?" Perhaps it's just the oddity of spoken words written down, but an understanding of Islam as the religion and a Muslim as a follower of that religion might have made for sharper communication. Later, Haneef tries to explain the concept of Mufeed — a club of doctors who get together to socialise. Asked whether the word is Indian or Arabic, Haneef says it means "something beneficial", adding "It's, that's it from Udo …" "So it's an Udo?" asks the policeman. Could Haneef have said or meant that Mufeed has its origins in the Urdu language? Is it possible that police did not know Urdu is an Indian language?”

xl “Australia’s High Commissioner Expects Fall in Indian Student Visa Applications,” One India, April 19, 2010. Accessible via http://news.oneindia.in/2010/04/19/australiashigh-commissioner-expects-fall-in-indianstud.htm (accessed June 9, 2010).

xli Author’s interviews. NAME? DATE?xlii “Uranium Expansion Policy Clear: Rudd,” ABC News, July 21, 2009. Accessible via

http://www.abc.net.au/news/stories/2009/07/21/2632364.htm (accessed June 9, 2010).xliii World Nuclear Association, “Australia’s Uranium,” January 2010. Accessible via

http://www.world-nuclear.org/info/inf48.html (accessed June 9, 2010).xliv Peter van Onselen, “Rule of Reckless Vows,” ABC News, December 27, 2008.

Accessible via http://www.theaustralian.com.au/news/opinion/rule-of-reckless-vows/story-e6frg6zo-1111118413753?from=public_rss (accessed June 9, 2010).

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production by 4-5 Million tones, and increased frequency and intensity of floods. It will also impact over 50% of India’s forests which are likely to experience shift in forest types, adversely impacting associated biodiversity. xlviii

Add to this India’s growth rates of +8%, a share of one sixth of the global population and changing consumption patterns, India’s carbon emissions are set to increase exponentially. Today India is the fourth largest emitter of greenhouse gases worldwide. By 2030, India’s urban population is projected to rise by 40-percent, bringing with it environmental issues including water and air pollution, waste disposal and traffic congestion.xlix

According to the latest Intergovernmental Panel on Climate Change (IPCC) report, India will experience the greatest increase in energy and greenhouse gas emissions in the world if it continues to sustain a high annual economic growth rate. The International energy Agency predicts that India will become the third largest emitter of greenhouse gases by as early as 2015. Currently fossil fuels alone accounts for 83% of India’s carbon dioxide emissions. Nearly 70% of India’s electricity supply comes from coal.l Simply put, India believes it cannot continue its dependence on fossil fuel.

According to projections by D.V Kapur a former Power Secretary of India, and member of the Energy Committee that went into future projections for India’s eleventh five-year plan -- all non-nuclear sources put together -- coal, oil, gas, renewable, etc., can meet only 75 percent of India’s energy needs by 2030, assuming GDP grows at 9 percent.li This leaves India’s planners with no choice but to look at nuclear energy seriously. And they are. Currently four new reactors are due to come on line by 2017. A further 25 reactors are on the drawing board.

Additionally, five so-called “Nuclear Energy Parks” are planned. The Indian nuclear industry is confident of being able to start work on these Nuclear Energy Parks by 2012.lii

Since India’s isolation from the global nuclear technology circuit, indigenous manufactures such as L&T have had to step into the breach. L&T has in the past thirty years produced heavy components for 17 of India's pressurized heavy water reactors and is now qualified by the American Society of Mechanical Engineers to fabricate nuclear-grade pressure vessels and core support structures.  It is only one of about ten major nuclear qualified heavy engineering enterprises worldwide.liii This has led to India into an interesting strategic position, one that Australia cannot ignore.

India by virtue of its size, former isolation from the nuclear technology circuit and its growing economic clout, is fast becoming one of the world’s cheapest large scale manufacturing bases for nuclear equipment.

2. THE INDO – US NUCLEAR DEAL

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If India needed any confirmation of Australia’s inconsistent position on uranium sales, they found it on the 6th of September, 2008 when the 45 nation Nuclear Suppliers Group (NSG) voted in favor of lifting a 34-year old nuclear trade embargo on India, helping it to resume nuclear commerce with the rest of the world.liv

The Australian Labor government, which had only months earlier overturned a decision by the previous Liberal government to sell uranium to India, joined other member states in the NSG to vote in favor of lifting the trade embargo. Earlier in July, Foreign Minister Stephen Smith was asked about the Indo-US nuclear deal by journalists and tried to explain the government’s position.

Well, our consideration of the U.S.-India nuclear civil arrangement certainly won’t lead to a change of policy, so far as Australia’s exports of uranium are concerned. …And Australia’s position has been consistent throughout and we’ve expressed it both to the United States and to India and also publicly, is that our longstanding policy position as a political party and as a government in office is we only export uranium to those nation-states who are parties to the Nuclear Nonproliferation Treaty.lv

For many in India, Australia’s latest foreign minister was only repeating what many of his predecessor’s have said many times over. Privately Indian diplomats were not pleased. According to one former Indian High Commissioner to Canberra:

There will undoubtedly be an adverse reaction if Australia continues to deny India Uranium while supplying Uranium to China. This situation will only get accentuated if Australia pretends it is doing India a favor by supplying uranium ore, when there are dozens of others prepared for wide ranging nuclear cooperation. We will mange with Australian cooperation if available and without it if necessary.lvi

Australia’s insistence that agreeing to allow an India specific exemption at the NSG was separate to selling India its uranium is something Indian diplomats struggled to understand. Speaking to Australian diplomats, politicians and analysts one can see just how wide this disconnect is. Australian leaders believe they have done all they can for India by allowing the NSG to go ahead with an exemption. They do not see uranium as an issue. Indian officials on the other hand point to precisely that. They cannot understand why Australia is still wedded to a treaty they consider unfair. Nor can they understand how Australia can claim the high moral ground while selling uranium to China and Russia.

Publicly though the Indian official reaction was conciliatory. Speaking in Canberra on a visit there, the Indian External Affairs Minister S. M Krishna was diplomatic.

Well, about the question of uranium, the position remains, as Foreign Minister Mr Stephen Smith enunciated it when he came to Delhi last year.

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But we are grateful to Australia for the support which they gave us in the Nuclear Supplier Group and the IAEA.lvii

But the Indo-US deal has shown just how outdated Australia’s relations with India are. Under the Bush administration Indo-US relations developed at a pace that few could have foreseen. Driven by personalities on both sides such as Nicholas Burns, Colin Powell, Condoleezza Rice, Robert Blackwill, Dick Stratford, Indian Foreign Secretaries, Shiv Shanker Menon and Shyam Saran, analysts such as Ashley Tellis, journalists, bureaucrats on both sides and business figures, the two sides forged a ground breaking treaty. As Dinshaw Mistry puts it:

A small group of Bush Administration officials developed and negotiated a major US foreign policy initiative – that of reversing a 30 year old nonproliferation policy and allowing nuclear energy cooperation with India.lviii

At the heart of the deal is big business. According to the Washington Post, India spent nearly $1.3 Million on lobbying forms, one of which was Barbour, Griffith and Rogers, headed by former US Ambassador to India Robert Blackwill. Also the Confederation of Indian Industries funded several trips to India for US Congressional delegations to the tune of half a million dollars.lix

As expected the Indo-US deal has opened the doors to India’s nuclear industry. In March this year, Russia announced it will build 16 nuclear reactors in India as part of defense and energy deals. Six of the reactors would be built by 2017.lx

Areva of France, GE-Hitachi and Westinghouse Electric Corporation of the USA are some of the other companies vying for a share of India’s business. Aside from the obvious business benefits, proponents of the deal argue that non-proliferation concerns have also been taken into account.lxi The deal they argue will help the world keep an eye on India’s nuclear development. While the argument over non-proliferation may not be over, one thing is for sure: India’s nuclear industry has gained a new lease of life from which it may never turn back.

Australian policy makers must decide just how much they want to engage with that industry. Two developments may give us a clue. The first is the Australian Minister for Resources and Energy, Martin Ferguson’s speech to the Labor Party National Conference in Sydney in April of 2007. While holding firmly on the party’s non-proliferation stand, Ferguson was categorical on Australia’s position as a nuclear fuel supplier.

“The truth is that, without Australia’s active involvement in the nuclear fuel cycle – as a strategic uranium supplier – we cannot expect to influence the future course of events when it comes to nuclear non proliferation.”lxii

If that is the case, the question must be asked whether the Australian Labor government is prepared to be left behind when India forges ahead with its nuclear ambitions.

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The Labor party’s history on taking what some in the party have described as “pragmatic” decisions is instructive. In 1971, the Whitlam government was elected on a platform of working towards establishing a domestic nuclear power sector. In 1975, having lost government, the party then veered away from the nuclear industry, arguing for a strong stance against uranium mining and export. It was seen not only as a counterpoint to the Liberal Party’s nuclear policies, but was reflective of the larger Australian population’s opposition to nuclear power and nuclear weapons.

In 1977, the Australian Labor Party (ALP) adopted a new policy. Any future labor government would declare a moratorium on uranium mining while also repudiating any

xlv Kerri-Anne Mesner, “ETS Scheme Still on Agenda,” The Morning Bulletin, April 12, 2010. Accessible via http://www.themorningbulletin.com.au/story/2010/04/12/rudd-wont-walk-away-ets-scheme-still-agenda/ (accessed June 9, 2010).

xlvi Lalit Mansingh, “The Promise and the Limits of the US India Relationship,” Lowry Insititute, March 25, 2008. Accessible via http://www.lowyinstitute.org/Publication.asp?pid=774 (accessed June 9, 2010).

xlvii World Nuclear Association, “Nuclear Power in India,” May 20, 2010. Accessible via http://www.world-nuclear.org/info/inf53.html.

xlviii “Climate Change and India: Impacts, Policy Responses and a Framework for EU-India Cooperation,” Policy Department Economic and Scientific Policy, European Parliament, 2008.

xlix “Sanda Lawson, David Heacock, and Anna Stupnytska, “Why the BRICs Dream Won’t be Green,” BRICs Monthly, Goldmann Sachs, vol. 06 no. 06, October 18, 2006. http://www2.goldmansachs.com/ideas/environment-and-energy/goldman-sachs/brics-green.pdf.

l “How Climate Change Affects India,” Climate Change India, 2010. Accessible via http://www.climatechallengeindia.org/How-Climate-Change-affects-India

li “The US-India Nuclear Agreement: Expectations and Consequences,” Brookings Institute, March 23, 2009. Accessible via http://www.brookings.edu/~/media/Files/events/2009/0323_india/20090323_india.pdf See question answer session by Dr Swaminathan Aiyar where he quotes D.V.Kapur. Aiyar goes on to explain how nuclear power may not be economical now but will become viable twenty years from now when fossil fuel prices hit the roof and when growth in India and China grow up to 50-percent. “Now, GDP growing at 9 percent I think is hopelessly optimistic. Surely it will be slower. But nevertheless, the point he is making is that beyond 2030, nuclear power becomes -- forget the issue of whether it’s desirable, he claims it will be inescapable. There will be no alternative because of the shortage of other sources of energy.”

lii World Nuclear Association, “Nuclear Power in India,” May 20, 2010. Accessible via http://www.world-nuclear.org/info/inf53.html (accessed June 9, 2010). These are ambitious plans and given India’s record of slow growth gives cause for skepticism. However, India’s private entrepreneurs are pouring money into the industry. Reliance Power Ltd, GVK Power & Infrastructure Ltd and GMR Energy Ltd are reported to be in discussion with overseas nuclear vendors including Areva, GE-Hitachi, Westinghouse and Atomstroyexport. India's largest engineering group, Larsen & Toubro (L&T) announced in July 2008 that it was preparing to venture into

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contracts to mining, processing or exporting made by a non-Labor government. By 1982, debate in the party had changed. Questions were raised about how the party would go about upholding the moratorium on uranium mining, the liabilities this action would cause and the sovereign risk the government would be exposed to. After much soul searching, the party decided on a compromise solution. The new policy committed the Labor party to uranium mining but with a view to preventing any new mines, limiting the country’s uranium production and the eventual phasing out of mining completely. This was Labor policy for nearly 25 years until 2007, when Kevin Rudd dismantled the long standing “Three Mines Policy”.lxiii Today, the state government of Queensland which is run by Labor continues to maintain a ban on uranium mining, but has awarded nearly 250

international markets for supply of heavy engineering components for nuclear reactors.  It formed a US$ 463 million venture with NPCIL to build a new plant for domestic and export nuclear forgings at its Hazira, Surat coastal site in Gujarat state. Early in 2009, L&T signed four agreements with foreign nuclear power reactor vendors.  The first, with Westinghouse, sets up L&T to produce component modules for Westinghouse's AP1000 reactor.  The second agreement was with Atomic Energy of Canada Ltd (AECL) "to develop a competitive cost/scope model for the ACR-1000."  In April it signed an agreement with Atomstroyexport primarily focused on components for the next four VVER reactors at Kudankulam, but extending beyond that to other Russian VVER plants in India and internationally.  Then in May 2009 it signed an agreement with GE Hitachi to produce major components for ABWRs from its new Hazira plant.  The two companies hope to utilize indigenous Indian capabilities for the complete construction of nuclear power plants including the supply of reactor equipment and systems, valves, electrical and instrumentation products for ABWR plants to be built in India.  L&T "will collaborate with GEH to engineer, manufacture, construct and provide certain construction management services" for the ABWR project.

liii World Nuclear Association, “Nuclear Power in India,” May 20, 2010. Accessible via http://www.world-nuclear.org/info/inf53.html (accessed June 9, 2010).

liv “India Crosses Nuclear Hurdle with NSG Waiver,” Business Line, September 7, 2008. Accessible via http://www.blonnet.com/2008/09/07/stories/2008090751320100.htm (accessed June 9, 2010).

lv Condoleezza Rice, “Remarks with Australian Foreign Minister Stephen Smith,” US Department of State, July 24, 2008. Accessible via http://merln.ndu.edu/archivepdf/india/State/107441.pdf.The foreign minister continued to articulate his government’s position thus: QUESTION: Does that mean that you’re – they don’t have to sign the NPT?FOREIGN MINISTER SMITH: No. Well, there’s two separate issues. We’ve always regarded the issues as being separate. We --QUESTION: Well, except that the first issue is that you won’t export uranium to anyone who hasn’t signed it. It seems to me directly at odds with the second statement, which is that you’re willing to consider it.FOREIGN MINISTER SMITH: Well, we don’t believe it is. And we don’t – and we don’t regard the two as being inconsistent. Other nation-states have different --QUESTION: So you still won’t give them – you still won’t sell them uranium?

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exploration permits. South Australia, home to two of Australia’s three operating uranium mines, also run by a Labor government, is at the forefront of the push to expand Australia’s uranium industry. India’s Reliance Industries, among others, is reported to have picked up a stake in exploration licenses in the state.

The second development is the report ‘Eliminating Nuclear Threats,’ released by the International Commission on Nuclear Non-Proliferation and Disarmament. The ICNND is a joint initiative of the Australian and Japanese Governments and follows on from a proposal by the Australian Prime Minister, Kevin Rudd. Its aim: to reinvigorate international efforts on nuclear non-proliferation and disarmament, in the context of both the 2010 Nuclear Non-Proliferation Treaty Review Conference, and beyond. The Commission handed down its report on the 15th of December 2009 and among its 332 pages is this recommendation:

Recommendations on Extending Obligations to Non-NPT States

17. Recognizing the reality that the three nuclear-armed states now outside the NPT – India, Pakistan and Israel – are not likely to become members any time soon, every effort should be made to achieve their participation in parallel instruments and arrangements which apply equivalent non-proliferation and disarmament obligations. [10.13–16]

18. Provided they satisfy strong objective criteria demonstrating commitment to disarmament and non-proliferation, and sign up to specific future commitments in this respect, these states should have access to nuclear materials and technology for civilian purposes on the same basis as an NPT member. [10.17]

19. These states should participate in multilateral disarmament negotiations on the same basis as the nuclear-weapon state members of the NPT, and not be expected to accept different treatment because of their non-membership of that treaty. [10.18]lxiv

For India, this may be a way forward. Indian Foreign policy analysts point to the existence of the India-specific exception within the NSG as proof that such arrangements

FOREIGN MINISTER SMITH: No.lvi He goes on to add: “When I was in Canberra as High Commissioner … I made it

clear…that I refused to be lectured to by people who had allowed their soil to be used and environment polluted by the atmospheric nuclear tests carried out by the United Kingdom. Moreover given the fact that Australia was a member of military alliances which included countries ready to use nuclear weapons it they felt threatened, Australia could hardly grumble about the actions of a country seeking to guarantee its own security in the face of two neighbors that had nuclear weapons.”

lvii Stephen Smith, “Joint Press Conference,” August 7, 2009. Transcript accessible via http://www.foreignminister.gov.au/transcripts/2009/090807_jpc.html (accessed June 9, 2010).

lviii “Diplomacy, Domestic politics and the US-India nuclear agreement,” Asian Survey, vol. XLVI, no. 5, September/October 2006.

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can work. Some even suggest that the “India-specific” provisions are a way of keeping India within the Nuclear Non-Proliferation regime.lxv For Australian policy makers looking for a way out of the non-proliferation strait jacket, this could be the answer.

So far there has been no talk of any change to Australian government policy in light of the ICNND report, nor have there been any moves to formulate an India-specific bilateral nuclear arrangement. Indeed at the recent NPT review conference in New York, Australian Foreign Minister, Stephen Smith once again stood by his government’s commitment to the NPT. But several sources suggest the sale of uranium to India is high on the agenda of the Labor party and will be discussed at the next party conference in 2011.lxvi

3. GROWTH

By its own projections, India’s population is expected to reach 1.47 Billion by 2031-32. According to the planning commission a growth rate of around 8% per annum over the next 25 years is essential for attaining basic goals such as lifting a sizable section of the population above the poverty line. A conservative projection of India’s energy needs to fuel this level of economic growth requires that basic capacities in the energy sector and related physical infrastructure such as rail, ports, roads and water grow by factors of 3 to 7 times by 2031-32.lxvii It will also require a 20-fold increase in nuclear and a 40-fold increase in renewable energy.

India has the world's 12th largest economy--and the third largest in Asia behind Japan and China--with total GDP in 2008 of around $1.21 trillion. But more than half of the population depends on agriculture for its livelihood. 700 million Indians live on $2 per

lix J.Sri Raman, “The US-India nuclear deal - One year later,” Bulletin of Atomic Scientists.

lx “Russia Signs India Nuclear Reactor Deal,” BBC News, March 12, 2010. Accessible via http://news.bbc.co.uk/2/hi/8561365.stm (accessed June 9, 2010).

lxi Ashley Tellis, “Atoms for War?” Carnegie Endowment for International Peace, 2006. Accessible via http://www.carnegieendowment.org/files/atomsforwarfinal4.pdf.

lxii Martin Ferguson, Labor Party National Conference, Sydney, April 28, 2007.lxiii World Nuclear Association, “Australia’s Uranium,” January 2010. Accessible via

http://www.world-nuclear.org/info/inf48.html (accessed June 9, 2010).lxiv “Eliminating Nuclear Threats: A Practical Agenda for Global Policymakers.” Report

of the international commission on nuclear non-proliferation and disarmament. Accessible via http://www.icnnd.org/reference/reports/ent/part-iii-10.html#equivalent (accessed June 9, 2010).

lxv Brahama Chellaney “Serious Implications for India in NGO Draft Proposal,” Rediff August 15, 2009. http://www.rediff.com/news/2008/aug/15brahma.htm (accessed June 9, 2010).

lxvi Author interviews DATE?

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day or less, but there is a large and growing middle class of more than 50 million Indians with disposable income ranging from $4,166-$20,833. Estimates are that the middle class will grow ten-fold by 2025. Foreign portfolio and direct investment inflows have risen significantly in recent years. They contributed to $255 billion in foreign exchange reserves by June 2007. The United States is India's largest trading partner. Bilateral merchandise trade in 2008 topped nearly $50 billion. The United States is also India's largest investment partner, with a 13% share. India's total inflow of U.S. direct investment was estimated at more than $16 billion through 2008. lxviii

Trade with Australia, however, is catching up. India is Australia’s fastest growing merchandise trade market. Australia’s goods exports to India have expanded at an annual average of 32 per cent over the five years to 2007, the fastest of all of Australia’s major markets.lxix Currently their trade relationship is dominated by commodities but the two countries are looking improving activity in areas of mining, technology and services as well as food processing. Mining is an interesting example. The Indian mining legislation is currently under review. Australian companies have expressed an abiding interest in expanding their mining operations in India but a myriad of local, state and federal laws have so far hampered any major Australian investment in this field. Privately Indian diplomats agree things need to be changed and as of now major players such as BHP Billiton are taking the watch and wait approach.

In 2009, India’s Petronet LNG signed a $20.5-billion gas purchasing agreement with Australia’s ExxonMobil, the first long-term gas contract between the two countries.According to the agreement, ExxonMobil will sell around 1.5 million tonnes of liquefied natural gas (LNG) annually from the Gorgon project in Western Australia to Petoronet for the next 20 years. lxx

Thus while economic growth prospects look promising; India is still struggling with its energy security requirements. According to India’s Planning Commission nuclear energy theoretically offers India the most potent means to long term energy security. India, the commission argues, has to succeed in realizing the three stage development process and to tap its vast thorium resource to become truly energy independent beyond 2050.lxxi

lxvii “Integrated Energy Policy: Report of the Expert Committee.” New Delhi: Government of India Planning Commission, August 2006. Accessible via http://planningcommission.nic.in/reports/genrep/rep_intengy.pdf

lxviii US Department of State, “Background Note: India,” http://www.state.gov/r/pa/ei/bgn/3454.htm#econ (accessed June 9, 2010).

lxix “Australia-India FTA Feasibility Study” Australian Department of Foreign Affairs and Trade, Accessible via http://www.dfat.gov.au/geo/india/fta-study/background_study.html (accessed June 9, 2010).

lxx “India, Australia Sign $20.5 Bn Gas Deal,” Thaindian News, August 19, 2009. Accessible via http://www.thaindian.com/newsportal/business/india-australia-sign-205-bn-gas-deal_100234788.html (accessed June 9, 2010).

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Thus nuclear energy becomes part of the mix of any developmental plan for the Indian economy. The questions for Australian policy makers are these: Does it want to be involved as an active partner in India’s nuclear fuel cycle and energy security as a “strategic uranium supplier”? And does it want be in a position where it can influence the future course of events when it comes to nuclear non-proliferation?

CONCLUSION

For any change in Australia’s policy to occur, the government needs to come up with a ‘creative’ solution which will have to be India specific. Much like the exception granted to India by the NSG, and supported by Australia, Canberra needs to put in place a bilateral agreement that will not only dismantle an inconsistent policy but will help bolster its proliferation concerns.

Climate change may well turn out to be the silver bullet that the Labor party is looking for when it debates any change to its non-proliferation requirements for the sale of uranium. The current renaissance in the nuclear industry, world wide, may also play its part.

But there are hurdles. Currently there is no substantive Indian lobby group in Canberra pushing for a change in policy. Unlike in the United States where an Indian lobby group grew out of necessity, Australia’s Indian community is neither organized nor well heeled to manufacture change. There are also no personalities on either side of the debate to help push the cause along. Indian diplomats privately argue for change, but publicly will not rock the boat. Neither does the Indian government. New Delhi rightly believes that a change in government in Canberra will bring about a change in uranium policy and it is not concerned, at this stage in the game, to either spend capital or invest in manpower pushing for something they can do without.

The impetus, then for any change, must come from Canberra. If as the Labor government says it wants to take the India-Australia relationship to the next level, the sale of uranium cannot be left on the back burner. As former Indian High Commissioner to Australia, G Parthasarty eloquently put it:   

“We will manage with Australian cooperation if available and without it if necessary.”

And that is not a good place to be for any relationship.

Notes

lxxi “India Rebounds, Needs to Return to Reform Agenda,” IMF Survey Magazine, February 5, 2010. Accessible via http://www.imf.org/external/pubs/ft/survey/so/2010/car020810a.htm (accessed June 9, 2010).

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