Relax, Mr Karat: 123 is a non-starter

Even if the US converts the 123 agreement into law, no US supplier will look at India until it passes a liability protection law. Since the Congress-led coalition lacks a majority, it cannot pass any legislation without your support. By refusing to support legislation on liability protection, you can ensure that the agreement is not operationalised.

Dear Prakash Karat,

You are so upset at the thought of India becoming a strategic partner of the US that yo-ur Left Front is determined not to allow nuclear cooperation between the two countries. You have said that the honeymoon between the Congress Party and CPI(M) is over, but the marriage is not. But you have threatened to end the marriage too if the Congress Party takes the next steps to make operational the so-called 123 agreement negotiated by the two countries.

Before the 123 deal can be submitted to the US legislature, India has to negotiate a formal agreement with the International Atomic Energy Authority on safeguards. That will be followed by clearance from the Nuclear Suppliers Group to resume supplies to India. After that, the 123 bill will go to US Congress for approval, following which India can once again get nuclear supplies from the world.

You have threatened to withdraw support to the ruling coalition if it starts talks with the IAEA and Nuclear Suppliers Group. You want to stymie the deal now itself, so that it cannot go to US Congress. To this end, you have threatened to pull down the government and precipitate an early general election. That is risky: given your party’s troubles in West Bengal and Kerala, you may lose many of the seats (and veto power) that you have in the Lok Sabha today. Why take such a risk? You seem unaware of a key technical issue that gives you a very powerful hand indeed, strong enough to trump the Congress Party’s cards. Even if the government clears all hurdles and the 123 agreement becomes law, it is in your power to prevent any US multinational from making any nuclear supplies.

The reason lies in the potential liability of US suppliers for any future nuclear accident. For most industries, an accident affects only a limited number of people in the neighbourhood. But the Chernobyl nuclear disaster in the Soviet Union sent nuclear radiation all the way to Scandinavia. A future accident could kill or maim millions of people across several countries, all of whom could sue the plant operators and suppliers of equipment. The legal damages would bankrupt any supplier.

In the Bhopal gas case, Indian courts issued a warrant for the arrest of the head of Union Carbide on criminal charges. The Three Mile Island accident in the US further raised public apprehensions, and Chernobyl was the final straw. So, US companies today refuse to supply equipment, know-how or blueprints to a country unless it first enacts legislation limiting the liability of suppliers. Indeed, the UN nuclear industry wants all countries to sign a comprehensive convention channelling all liabilities of an accident to the operator of the plant, leaving the suppliers unscathed.

In the US itself the liability of the nuclear industry is capped, with the US government guaranteeing to pay damages over and above the cap. Similar laws have been enacted in Japan, Korea and even China. But for this, China would not have received so many bids for its new generation of nuclear plants.

However, India does not have any such law. At a meeting of the CII and US Chambers of Commerce in Washington in June, Mr Omer Brown, one of the top legal experts on nuclear liability who also represents the US nuclear industry, said that no American firm would supply even a blueprint, let alone equipment, until India provided nuclear liability protection.

A nuclear liability regime would ensure compensation to the public in the event of an accident, he explained. Such a regime would also channel all liabilities to the nuclear facility’s operator (eliminating the need to prove fault or sue multiple parties), and would designate a single competent court to consolidate all claims and give a final, binding verdict. It would cap the liability of the industry, with the government paying damages above the cap.

So, Mr Karat, even if the US converts the 123 agreement into law, no US supplier will look at India until it passes a liability protection law. Since the Congress-led coalition lacks a majority in Parliament, it cannot pass any legislation without your support. By refusing to support legislation on liability protection, you can ensure that the 123 agreement is not operationalised.

Now, foreign government-owned companies may be happy to supply nuclear equipment because they have an implicit government guarantee, and cannot be bankrupted by legal suits. Russian nuclear companies are government controlled, and would be willing to make supplies without a liability law. They are already doing this for the Koodankalam nuclear plant. The French nuclear industry is also government controlled. But it has strong private shareholders too, and these may insist on liability protection. Without question, the Russians would have a huge advantage over all others.

So Mr Karat, relax. Let the government negotiate with the IAEA and Nuclear Suppliers Group. Let the US pass the 123 law. And then sit back happily and watch Russia win all the nuclear contracts that follow. No need to file any divorce papers, you have veto power in this marriage.

What do you think?