Great topic Mythili though I don't think many people (including me) know about it well enough. Here are two articles on this deal by noted Defence Analyst Brahma Chellaney:
https://www.asianage.com/presentation/columnisthome/brahma-ch ellaney/frail-deal-built-on-wordplay.aspx
Stagecraft & Statecraft | Brahma Chellaney
While the Indian foreign minister has claimed "all concerns of India have been reflected and adequately addressed" in the just-concluded bilateral civil nuclear cooperation agreement under Section 123 of the US Atomic Energy Act (AEC), Washington has asserted that the accord safeguards US interests "from a variety of different perspectives." In public comments and background briefings, the two governments have zealously sought to put their own spin. The true picture would be known once they unwrap the still-secret text. New Delhi in particular appears anxious to soften public opinion at home before releasing the fine print.
Two important points, however, have already been admitted by both sides - that the so-called 123 agreement expressly states that nuclear cooperation would be governed by "national laws" of the two parties; and that its text is within the parameters set by the India-specific, conditions-laden Hyde Act. As US undersecretary of state Nicholas Burns has bragged, "We're very satisfied because we know the agreement is well within the bounds of the Hyde Act."
In fact, US officials have gone to the extent of saying that the concessions they made in the fine print are more in the form of semantic guile than in substance, designed to help India address critics at home and seal the accord. The Washington Times, close to the White House, has quoted administration and congressional sources as saying that "some language is deliberately vague to help both sides save face" and that the text was "deliberately written in a way that can be interpreted differently by the two sides."
In other words, both sides can claim success, while in reality the cooperation would be conditioned by the Hyde Act, euphemistically referred to in the text as the applicability of "national laws." That is exactly what this columnist had warned in a two-part article last May 14-15 - that if the 123 agreement were to be in consonance with the Hyde Act and yet not rub salt on Indian wounds, there was only one way out: semantic subterfuge in the fine print. The reluctance to release the text more than a week after the agreement was concluded is a sign that there have been only semantic compromises on key issues. And US officials are saying so.
For India, this represents a major climbdown: having told Parliament that the Hyde Act contained provisions that were either "prescriptive" in ways incompatible with the July 18, 2005 joint statement or "extraneous" to engagement "between friends," New Delhi has come round to accepting cooperation with the US on the basis of the onerous and grating conditions in the US legislation. Indeed, in defining India's bottom line in Parliament last August 17, Prime Minister Manmohan Singh had admitted, "We have concerns over both the House and Senate versions of the Bill."
However, once the US legislative process was completed without meeting most of the PM's benchmarks, New Delhi readily entered the next stage - negotiations over a 123 agreement - by pretending that Dr Singh's assurances to Parliament could be addressed in that process. That was just a charade to buy political space, given that India's deal-related commitments by then had already been expanded and turned into immutable legal obligations through US domestic law.
New Delhi was aware that even if the 123 agreement did not incorporate the controversial conditions of the Hyde Act, it would hardly free India from their obligations. America has always maintained that because such a bilateral agreement is a requirement not under international law but under US law, it cannot supersede American law. Washington has only reinforced its legal position by incorporating in the 123-agreement text the primacy of "national laws."
New Delhi indeed knows from its bitter Tarapur experience that a 123 agreement has little sanctity in international law. The earlier Indo-US 123 accord, signed in 1963, was abandoned by Washington in 1978 - four years after the first Indian nuclear test - simply by enacting a new domestic law that retroactively overrode the bilateral pact. That broke with impunity a guarantee to supply "timely" fuel "as needed" for the US-built Tarapur plant.
Now, New Delhi claims it has secured assured fuel supply in the new 123 agreement, and that in the event of any disruption, the US would find an alternative source. But US officials are already disputing that. The Washington Times has quoted officials as saying "the language does not commit them to do anything specific. Rather, if there is an interruption because of technical or logistical difficulties, they will try to do what is appropriate." That is in line with the Hyde Act which says assured fuel supply covers only disruption due to "market failures or similar reasons," not sanctions arising from India's non-compliance with US-imposed conditions.
More broadly, it should not be forgotten that only after India has complied with all the Hyde Act's preconditions that the US Congress would take up the final deal for approval.
And although the Hyde Act provides for an
up-or-down vote on a joint resolution - a practice that does not permit any amendment - the legislation's own explanatory statement reserves the right for Congress to "pass a joint resolution of approval with conditions" by giving up "the expedited procedures offered by Sections 123 and 130 of the AEA." That is exactly what happened with the US nuclear deal with China, when Congress attached three conditions to its 1985 joint resolution of approval, resulting in a nearly 13-year hold.
But before the final Indo-US deal can go before Congress, it has to secure approval from the 35-nation International Atomic Energy Agency board and the 45-state Nuclear Suppliers' Group. Even in the best-case scenario, with all the remaining hurdles being crossed, the US will perpetually hang the threat of re-imposition of civil nuclear sanctions to enforce India's compliance with the Hyde Act's post-implementation conditions.
New Delhi is itching to enter into a new 123 agreement without resolving the outstanding issues from the earlier 123 accord. The Tarapur spent fuel has been accumulating for 36 years. Washington has neither compensated New Delhi for the large costs it continues to incur to store the highly radioactive spent fuel nor allowed India to reprocess it by accepting that IAEA safeguards can be effectively applied at the PREFRE facility specially built for this purpose.
While the PM had pledged to secure the removal of "restrictions on all aspects of cooperation," including "reprocessing spent fuel," the US, under the new 123 accord, has conceded only a theoretical right to India to reprocess, with the practical right to be worked out in negotiations with the US in the future. India would build a new reprocessing facility with safeguards involving US participation. This not only prolongs the Tarapur imbroglio but also raises a larger question: why acquiesce to the US having a political say on reprocessing when the issue of safeguards involves only the IAEA?
Take another issue - a perpetual nuclear test ban on India. Through the means of a domestic law, America today seeks to implicitly bind India to an international pact whose ratification the US Senate rejected in 1999 - the Comprehensive Test Ban Treaty.
Such a test ban, as both sides have admitted, cannot be, and has not been, diluted by the 123 agreement. Even the US "right to return" remains untouched. However, as the Washington Times puts it, "to help New Delhi save face domestically, the administration agreed to consult with the Indian government before taking any action in response to a test, officials said. The Indians presented that language as a major US concession, but US officials said consultations do not mean much in practice."
New Delhi should be fully cognisant of what it is getting into. It would be effectively embracing CTBT-plus obligations that no nation has done. Although the PM had pledged that India is "not prepared to go beyond a unilateral voluntary moratorium on nuclear testing," the Hyde Act seeks to enforce a tight, irrevocable test prohibition against India by actually going beyond the existing provisions of US law, which empower the President to continue exports on strategic grounds despite a test. By decreeing that the waiver for India will automatically terminate with any Indian test, the Hyde Act itself admits that it goes "beyond Section 129" of AEC.
Besides seeking "full and immediate use of US rights to demand the return of all nuclear-related items … if India were to test," the Act goes beyond even the CTBT by specifying in technical terms what is prohibited for India. In the CTBT negotiations, the US had successfully opposed an Article I definition of a "nuclear explosion" to leave open loopholes for "permissible activities" of the type it carries out at its Nevada test site. While refusing to accede to the CTBT itself, the US would be enforcing CTBT-plus obligations on India. Once India has imported power reactors worth billions of dollars, the Hyde Act will effectively bear it down.
Against this background, the debate on the 123 agreement needs to be conducted in a sober, realistic way, not through spin and hoopla. By papering over fundamental differences, the deal could engender serious Indo-US discord in the years ahead. That danger is already manifest from the conflicting analysis of the still-secret 123 agreement by official briefers. One US congressional official is quoted as saying, "The way the Indians are reading it is not correct from the administration's point of view."
Too often in its independent history, India has rushed to believe what it wanted to believe, only to cry betrayal later.
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https://www.asianage.com/archive/htmlfiles//Top%20Story/123%2 0%20text%20and%20context.html
123: text and context
By Brahma Chellaney
New Delhi, Aug. 3: The released text of the 123 agreement on civil nuclear cooperation reveals that the United States, besides upholding the primacy of its laws, has gained two absolute rights €" the right to unilaterally terminate cooperation with India at will (without arranging alternative suppliers), and the right to take back all supplied items and materials.
In withholding the text for two long weeks, the US and Indian governments sought to spin reality to suit political ends. Now the facts need to be separated not just from spin, but also from wishful thinking.
This proposed bilateral agreement has at least 12 important facets:
1. It confers on the US an unfettered and uninfringeable right to terminate cooperation with India at will. Article 14(2) states: "The party seeking termination has the right to cease further cooperation under this Agreement if it determines that a mutually acceptable resolution of outstanding issues has not been possible or cannot be achieved through consultations." That would put India at the mercy of the supplier, holding all the leverage.
Even though termination is to take effect at the end of a one-year notice period, the agreement explicitly empowers the US to forthwith suspend all cooperation without much ado. The only requirement is that a "party giving notice of termination shall provide the reasons for seeking such termination".
In light of the one-sided dependency the agreement would create, such a US right will not only help bind India to the non-proliferation conditions set by the US Congress through the Hyde Act, but it also goes against the purported assurances of uninterrupted supply of fuel and spare parts. Significantly, Article 14 on termination does not enjoin the withdrawing party to make alternate arrangements for supplies to the other side before it ceases all cooperation.
2. In a departure from a standard clause found in America€™s 123 agreements with other states, this accord does not uphold a core principle of international law €" that failure to perform a treaty or agreement cannot be justified by invoking the provisions of a domestic law. Rather, this agreement is unambiguously anchored in the supremacy of national laws and regulations (which means US laws like the Hyde Act, because there is no Indian law governing nuclear cooperation with the US or any other specific country).
Contrast this accord with the 1985 US-China 123 agreement, which in its Article 2 (1) states: "The parties shall cooperate in the use of nuclear energy for peaceful purposes in accordance with the provisions of this agreement. Each party shall implement this agreement in accordance with its respective applicable treaties, national laws, regulations and license requirements concerning the use of nuclear energy for peaceful purposes. The parties recognise, with respect to the observance of this agreement, the principle of international law that provides that a party may not invoke the provisions of its internal law as justification for its failure to perform a treaty."
The third sentence about the non-invocation of domestic laws is tellingly missing from this agreement, even as the first two sentences find mention. This omission is because of one simple fact: Never before in US legislative history has a law been enacted imposing such numerous and onerous conditions on an avowed strategic partner to permit cooperation in just one area as the Hyde Act does.
That is why even the agreement€™s Article 15, titled "Settlement of Disputes", is toothless, making no reference to the applicability of the principles of international law. It reads: "Any dispute concerning the interpretation or implementation of the provisions of this agreement shall be promptly negotiated by the parties with a view to resolving that dispute." That means the recipient state will have to listen to the supplier.
Both the US and Indian sides have publicly acknowledged that the agreement is within the legal framework of the India-specific Hyde Act, which reigns supreme in this arrangement.
3. While there is no explicit reference to nuclear testing, a test prohibition against India has been unequivocally built into the agreement€™s provisions through the incorporation of the US€™ right to demand the return of all supplied materials and items. India€™s unilateral moratorium is being stripped of its voluntary character and turned into a bilateral legality in this manner. Through the US "right of return", the 123 agreement explicitly hangs the Damocles€™ sword over India€™s head.
While the Hyde Act€™s Section 106 openly bans Indian testing, the 123 agreement reinforces that test ban both by upholding the applicability of national laws to govern cooperation and by incorporating the US€™ "right of return".
As part of the same design to enforce permanent Indian compliance with the Comprehensive Test Ban Treaty €" a pact the US Senate soundly rejected in 1999 €" Washington has already recommended that the Nuclear Suppliers€™ Group (NSG) link its proposed exemption for India to a similar test ban. The NSG exemption could even come with a "right of return" being conferred on all supplier states. In other words, the test ban under the 123 agreement is to be converted into a multilateral legality through the NSG.
4. The US has an unencumbered right under the 123 agreement to terminate cooperation not only in response to an Indian test but also if India, in Washington€™s judgment, fell short of the "full compliance" required of it by the Hyde Act with regard to other prescribed non-proliferation conditions. The 123 agreement does not in any way rein in the US right to unilaterally terminate cooperation.
Implicit in this agreement is India€™s readiness to honour the US-set non-proliferation conditions.
5. By conceding that the US has a right to unilaterally terminate cooperate and demand the return of all equipment and fuel supplied in the past, New Delhi has lent legitimacy to what is a dubious concept in international law €" that the supplier is at liberty to terminate cooperation retroactively.
The agreement states that before invoking the right of return, the concerned party would "undertake consultations with the other party". But that is nothing but public relations because such consultations would be of no consequence. The supplier-state, however, would "compensate promptly that party for the fair market value" of the items and materials it takes back.
6. While the US has the right to terminate cooperation at will and withdraw from all obligations, India has been denied the right to withdraw from all its obligations, even if the agreement was terminated at America€™s instance. The agreement more than once cites the permanent nature of India€™s obligation to accept international inspections on its entire civil nuclear programme, including the indigenously built facilities it is voluntarily opening to external scrutiny.
In a hypothetical situation, if the US were to terminate all cooperation and suspend all fuel and equipment transfers, India would be stuck both with everlasting IAEA inspections on its entire civil programme and with lack of access to an alternate supplier.
7. The US has also reserved its right in the 123 agreement to unilaterally suspend the reprocessing-related "arrangements and procedures" it intends to work out with New Delhi in the years ahead, once India has built a new reprocessing facility under IAEA safeguards. National security adviser M.K. Narayanan has already warned that "spoilers" may nit-pick on the facility€™s design and cause delays.
The text clearly shows that the US has granted India the right to reprocess only in principle. The grant of actual right would take many years, with the US retaining a veto on Indian reprocessing until then. It will take at least five years to build the new facility, after the construction of which, the agreement says, "the parties will agree on arrangements and procedures" for reprocessing "in this new facility". It goes on to say that consultations on such arrangements and procedures "will begin within six months of a request by either party and will be concluded within one year". Thereafter, the reprocessing agreement would go to the US Congress for vetting.
This entire process €" from the start of work on the facility to congressional approval €" would be a long haul. Yet, once in place, the US could terminate the reprocessing-related "arrangements and procedures" in yet-to-be-defined "exceptional circumstances".
8. The sugar-coated provisions in the agreement relating to "consultations" and uninterrupted fuel supply appear more to help India save face than to set out enforceable obligations. Although "consultations" are referred to repeatedly in the text, in no context does the agreement provide for consultations to achieve a mutually acceptable outcome. At best, it provides for consultations within a specified time frame in one context.
In all the specified circumstances, consultations are to be toothless and, in any event, subsidiary to the central requirement that the agreement be in accord with the provisions of national laws. The agreement gives India little say.
9. The agreement plays cleverly on words to fashion an illusion at times. For example, Article 5(4) states: "The quantity of nuclear material transferred under this Agreement shall be consistent with any of the following purposes: use in reactor experiments or the loading of reactors, the efficient and continuous conduct of such reactor experiments or operation of reactors for their lifetime, use as samples, standards, detectors, and targets, and the accomplishment of other purposes as may be agreed by the parties."
Note this provision does not allow India to build up lifetime reserves, as the Prime Minister had pledged in Parliament. It only permits fuel supply consistent with the efficient and continuous operation of reactors for their lifetime. This is just one example of how an optical illusion is sought to be created.
In fact, nowhere does the agreement specifically permit India to accumulate lifetime fuel reserves. The agreement is so cleverly worded that it refers to strategic fuel reserves in its aims and objectives, and then in Article 5(6)(a) it states that "the United States is committed to seeking agreement from the US Congress to amend its domestic laws and to work with friends and allies to adjust the practices of the Nuclear Suppliers€™ Group to create the necessary conditions for India to obtain full access to the international fuel market, including reliable, uninterrupted and continual access to fuel supplies from firms in several nations". In other words, the agreement admits that the US has yet to make the necessary adjustments in its laws that it promised in July 2005.
Then, in the very next subsection (b) of Article 5(6), it is stated as follows: "To further guard against any disruption of fuel supplies, the United States is prepared to take the following additional steps: i) The United States is willing to incorporate assurances regarding fuel supply in the bilateral US-India agreement on peaceful uses of nuclear energy under Section 123 of the US Atomic Energy Act, which would be submitted to the US Congress." But this is the agreement under Section 123, and there is no such ironclad assurance.
10. The agreement brings out starkly that India has accepted terms that fall short of the promised "full cooperation".
In keeping with the Hyde Act€™s prohibition on transfers of equipment and technology in certain areas, the 123 agreement offers this palliative in Article 5(2): "Sensitive nuclear technology, heavy water production technology, sensitive nuclear facilities, heavy water production facilities and major critical components of such facilities may be transferred under this Agreement pursuant to an amendment to this Agreement. Transfers of dual-use items that could be used in enrichment, reprocessing or heavy water production facilities will be subject to the parties€™ respective applicable laws, regulations and license policies."
11. In accepting this clause, India has not only acquiesced to restrictive cooperation, but also gone one step beyond its current policy to align with US policy on an important point €" that any enrichment, reprocessing or heavy-water activity, even when occurring under stringent IAEA inspections, is "dual-use" in nature and thus liable to be restricted.
This is the very thrust of the US case against Iran, with Tehran being asked to forego all IAEA-safeguarded enrichment or reprocessing activity, despite Iran€™s insistence that it is its lawful right to pursue such fuel cycle-related work under the provisions of the NPT. In seeking to forge an arbitrary new regime dividing the world into fuel-cycle possessors and fuel-cycle abstainers, the US has dubbed even IAEA-safeguarded enrichment and reprocessing activity as "dual use".
In addition to ensuring IAEA inspections on all aspects of India€™s civilian nuclear programme, the US had staked an unparalleled double prerogative: the right to statutorily establish its own end-use monitoring, as called for in the Hyde Act Section 104(d)(5)(B)(i); and the right to institute "fallback safeguards" in case of "budget or personnel strains in the IAEA". The fallback option, stipulated in Hyde Act€™s Section 104 (d)(5)(B)(iii), is to ensure that India is subject to intrusive, challenge inspections of the type the IAEA applies in non-nuclear states.
In the 123 agreement, the US has succeeded in subtly asserting its prerogatives on both fronts.
The provision for fallback safeguards finds mention in the agreement€™s Article 10(4), which states, "If the IAEA decides that the application of IAEA safeguards is no longer possible, the supplier and recipient should consult and agree on appropriate verification measures." That complies with the Hyde Act stipulation.
End-use US monitoring (to which India is committed through an earlier bilateral agreement on high-tech imports) is reflected in the agreement€™s Article 12(3): "When execution of an agreement or contract pursuant to this Agreement between Indian and United States organisations requires exchanges of experts, the parties shall facilitate entry of the experts to their territories and their stay therein consistent with national laws, regulations and practices. When other cooperation pursuant to this Agreement requires visits of experts, the parties shall facilitate entry of the experts to their territory and their stay therein consistent with national laws, regulations and practices".
12. While the US has managed to fully uphold all its laws, including the India-targeting Hyde Act, with New Delhi€™s own admitted support, it is manifest from the released text that the Indian government has been unable to fully uphold even the Prime Minister€™s solemn assurances to Parliament.
History is repeating itself. Ignoring the egregious way America cut off all fuel supply for Tarapur in the 1970s in material breach of the 123 agreement it signed in 1963, India is entering into new arrangements with its wings clipped (like on nuclear testing) as well as ambiguity or uncertainty on key issues. Even the actual grant of and continuation of the reprocessing right is to be contingent on India€™s good behaviour.
Creating a US-monitored energy dependency through imported reactors dependent on imported fuel through a fresh 123 agreement loaded in favour of the supplier-state is to ask for trouble, especially when the new 123 accord is not half as protective of Indian interests as the 1963 agreement.
(Brahma Chellaney, a strategic-affairs expert, is the author of Nuclear Proliferation: The US-India Conflict.)
United Kingdom: 45 tests (21 in Australian territory, including 9 in mainland South Australia at Maralinga and Emu Field, some at Christmas Island in the Pacific Ocean, plus many others in the U.S. as part of joint test series) China: 45 tests (23 atmospheric and 22 underground, at Lop Nur Nuclear Weapons Test Base, in Malan, Xinjiang) India: 5 or 6 underground tests, at Pokhran. Pakistan: between 3 and 6 tests, at Chagai Hills. 
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