With the second round of the United States-India Strategic Dialogue round the corner, public messages by both governments indicate a blossoming bonhomie. But if the Nuclear Suppliers Group proposes more restrictive guidelines this week for the sale of enrichment technology to countries such as India, make no mistake, the daggers will be out.

Both sides appeared to be digging in their heels and heading for a potentially sharp disagreement in Noordwijk, Netherlands, where India's request for membership is also on the NSG agenda. While this follows logically from the U.S. promise to back India's entry into the global multilateral export control regimes, the guidelines that are being proposed are “set to up-end India's clean waiver” (see The Hindu, June 18, 2011).

When pressed on whether the U.S. would spearhead any new guidelines that flouted the clean waiver given to India, State Department spokesperson Victoria Nuland said: “The NSG has an annual meeting every year and the goal of this group is to contribute to non-proliferation of nuclear weapons through the implementation of a set of agreed guidelines for nuclear exports, nuclear-related products, and to ensure that nuclear trade is for purely peaceful reasons.”

This blunt re-stating of the established position does not augur well for an argument-free meeting in Netherlands.

Yet, in media briefings, Indian officials too, reverted to their firm belief that what was promised to India could not be overturned. “From the Indian point of view the important thing is that the NSG had given a clean waiver to India and we want to emphasise that,” said Indian Ambassador Meera Shankar. Commerce and Industry Minister Anand Sharma added, “In our perspective, or in our understanding, which is a very clear one, enrichment technology is part of that.”

However, given the way the bilateral nuclear web has been spun, there will be a more complex denouement that is likely to go beyond any single NSG meeting. After all, the passage of the nuclear liability bill has left U.S. nuclear firms in legal limbo even as they scramble to assess the risks they will have to take on if they are to set up shop on Indian soil.

Thus far, Indian officials seem happy to take a decidedly parental view on moving things forward — firm that they will not budge from the wording of the bill passed in Parliament and yet encouraging toward U.S. nuclear corporations that have got swept up in a cloud of uncertainty and risk-aversion.

In this context, Ms. Shankar said while India has said publicly it would ratify the Convention on Supplementary Compensation this year, “It is for the U.S. companies now to proceed with commercial negotiations... and we would hope that the companies would move forward quickly in this regard.” Ms. Shankar added that the nuclear companies “have been in touch” and had held discussions and workshops with India's nuclear power apparatus.

The U.S. may, nevertheless, wish to tread carefully as it is increasingly clear its nuclear competitors such as Russia and France are sparing no effort to move forward with their engagements with the Indian establishment.

Mr. Sharma said here that these countries might soon even be able to conclude commercial negotiations. “When I was in France, the French nuclear people, including the CEO of Areva, met with me. It is very clear that [similarly Russia] is very enthusiastic to move forward.”

Given the multiplicity of options for Indian policymakers, New Delhi's strategic patience in dealing with U.S. nuclear companies may not last forever. If the U.S. introduces harsh NSG restrictions against the sale of enrichment technology to India, especially, it may well find itself at the receiving end of a dangerous chain reaction.

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