Relations between Australia and India crossed an important milestone with last week’s signing of the Agreement on the Peaceful Uses of Nuclear Energy. Following the lead of the United States, Australia was one of the countries that strongly opposed the 1998 Pokhran nuclear tests, joining Western nations in imposing sanctions against India. But even after U.S.-India relations underwent a sea change, culminating in the signing of a civilian nuclear deal in 2005, Australian opposition to India’s nuclear programme continued. With 40 per cent of the world’s uranium reserves, Australia is pivotal to India’s nuclear energy road map. It was only in 2011 that then Prime Minister Julia Gillard was able to overturn her Labor party’s long-standing opposition on uranium sales to India, paving the way for the signing of the agreement during Prime Minister Tony Abbott’s visit. With this, the once frosty and later lukewarm relations between the two countries are poised for a transformation. Underlying this change is, of course, India’s economic rise, its emergence as an important market as well as a source of capital, and the Australian realisation that crossing the nuclear hump is key to accessing these. The demand for uranium fell after the Fukushima disaster, and the push for sale to India came in large measure from the Australian mining industry, an important sector of that country’s economy, but one that is well past its glory days. Australia is also looking to expand trade with India. Mr. Abbott, whose delegation included a big group of CEOs, wants to conclude a Comprehensive Economic Partnership Agreement with New Delhi by 2016.
As well as economic ties, the agreement on selling uranium is certain to improve the strategic relationship. Mr. Abbott has made no secret of his view that India’s partnership is essential to sustaining the U.S-led push to maintain the strategic balance in East Asia vis-à-vis China. Prime Minister Narendra Modi’s recent visit to Japan, and the oblique references by both him and Japanese Prime Minister Shinzo¯ Abe to China’s dominance as they pledged support to a “special” global and strategic partnership that would be a force for “peace, stability and prosperity in Asia and the world,” might have reinforced the notion that under the new government New Delhi is more open to playing a role in containing China’s rise. Mr. Modi’s visit to Australia for the G-20 summit and bilateral meetings will be the first by an Indian Prime Minister in 28 years. But as Australia and India prepare to open a new chapter in their bilateral ties, neither can afford to overlook the crucial economic relationship both have with China, and in India’s case, a border dispute that still awaits resolution.
