U.S. President George W. Bush and Indian Prime Minister Manmohan Singh at a press conference in 2006 after the signing of the U.S.-India nuclear agreement. Photo courtesy of U.S. Department of State

WASHINGTON – The multinational body that regulates the sale of nuclear fuel and technologies worldwide has approved a key security provision of the controversial U.S.-India nuclear energy agreement, effectively lifting a 34-year-old ban on India's right to purchase nuclear-energy supplies from other nations.

The 45-nation Nuclear Suppliers Group – which works to reduce nuclear proliferation by controlling the export and transfer of nuclear technology and fuel that may be used to develop nuclear weapons – unanimously approved the so-called "123 Agreement" of the Henry J. Hyde United States-India Peaceful Cooperation Act Sept. 6 in Vienna, Austria.

In doing so, the Nuclear Suppliers Group ended an embargo on nuclear trade with India that began shortly after the South Asian nation successfully exploded its first nuclear weapon – a bomb that was dubbed "Smiling Buddha" – on May 18, 1974, near the northwestern city of Pokhran.

The agreement still faces a final, significant obstacle: ratification by the United States Congress, which would clear the way for American companies to sell nuclear fuel, technology and related services to Indian firms. But there may not be enough time for lawmakers to consider it: The Hyde Act, which U.S. President George W. Bush and Indian Prime Minister Manmohan Singh gave their signatures to Dec. 9, 2006, requires that Congress be in session for 30 consecutive days in order to consider it.

Yet, because this is an election year, the congressional calendar expires Sept. 26 – several weeks earlier than normal. Although a lame-duck session after the November election remains a possibility, House Speaker Nancy Pelosi, D-Calif., has repeatedly insisted Congress will not meet after the Nov. 4 elections.

Landmark Deal for United States, India

The suppliers’ group decision came after four days of heated discussions in Vienna, and capped a months-long pressure campaign by the Bush and Singh administrations. The U.S. government described the breakthrough as "historic" and called it a "landmark deal" that would boost nuclear nonproliferative efforts around the world, while still enabling India to satisfy its huge and growing appetite for energy with a low-polluting source.

"This is a historic agreement for the Nuclear Suppliers Group, for India, for U.S.-Indian relations, indeed India's relations with the rest of the world," John Rood, acting U.S. Undersecretary for Arms Control and International Security, said to reporters after talks wrapped up Sept. 6. "Today at the NSG, we have reached a landmark decision to allow for civil nuclear trade with India. This is an important moment also for the strengthening of the nuclear nonproliferation regime. This is a critically important moment for meeting the energy needs in India, and indeed, dealing with the global need for clean and reliable energy supplies."

U.S. Secretary of State Condoleeza Rice, who was traveling in North Africa on unrelated business when the suppliers group announced its decision, said that the Indian government and "a number of delegations that work very closely with [the United States]" made the victory possible.

"What we now have is a way for India to pursue civil nuclear technology for all the reasons that states need to do that, given the energy crunch, given the environmental issues associated with hydrocarbons," Rice said Sept. 7, following a meeting Moroccan Foreign Minister Fassi Fihri. "It has a way to do that, that expands the reach of the [International Atomic Energy Agency], concerning Indian civil nuclear activities, that begins to expand the reach of the nonproliferation regime, and that does so without violating important principles that are there in the [Nuclear Nonproliferation Treaty], itself."

The NSG banned trading of nuclear technology and fuel with India in 1974, following the Smiling Buddha test and because of the country's refusal to sign the 1970 Nuclear Nonproliferation Treaty. Since then, India has been an international nuclear pariah - unable to buy nuclear fuel, parts or equipment from most nations. The Bush administration requested that the NSG grant a special waiver so that the United States could share civilian nuclear technology with India. But even as representatives of the suppliers group gathered in Vienna to debate the proposal, several members expressed reservations about allowing India into the international nuclear club.

Three nations in particular – Austria, New Zealand and Ireland – asked for a clear-cut commitment from India that it would refrain from nuclear weapons testing. But the Bush administration pressured the holdouts not to impose such restrictive amendments to the 123 Agreement. The White House has not disclosed the exact terms of the agreement that the group approved, but it appears that India did agree to maintain its self-imposed moratorium on future nuclear-weapons tests.

The U.S.-India Business Council, which has been a staunch supporter of the nuclear accord from its inception, praised the NSG for its decision and pledged to lobby Congress for ratification of the 123 Agreement. The Washington, D.C.-based pro-business organization cited Congress' overwhelming approval of the Hyde Act in early 2007 – the House of Representatives voted 359-69 in favor of it, while the Senate approved it by a vote of 85-12 – as a reason why Congress should approve the 123 Agreement.

"NSG approval is a historic step forward for India and for the world," USIBC president Ron Somers said in a statement. "This landmark initiative will benefit global energy security, stem global warming, and it brings India into the global nonproliferation mainstream."

The Hyde Act gave preliminary approval to the U.S.-India nuclear deal and amended Section 123 of the United States Atomic Energy Act of 1954, which establishes an understanding for cooperation as a prerequisite for nuclear deals between the United States and other nations. Such an understanding is the basis for the 123 Agreement – which is actually a treaty, whereas the Hyde Act is an internal law of the United States. To date, the U.S. has entered into roughly twenty-five 123 agreements with various countries.

In early August, the Vienna-based International Atomic Energy Agency unanimously approved the 123 Agreement of the Hyde Act, despite facing strong criticism that the clause's ambiguous language could limit international oversight of India's nuclear reactors, undermine the international non-proliferation treaty and even help supply India's arms program with fissile material. The decision by the IAEA – which seeks to promote the peaceful use of nuclear energy and to inhibit its use for military purposes – enables United Nations monitors to access India's 17 nuclear reactors and other facilities by 2014; six of the reactors already fall under existing safeguard agreements.

Indian advocates of the nuclear deal were understandably elated with the NSG's decision. In the streets of New Delhi, groups of revelers lit firecrackers while others danced outside the headquarters of Singh's Congress Party. "It is a recognition of India's impeccable nonproliferation credentials and its status as a state with advanced nuclear technology," Singh said in a statement. "It will give an impetus to India's pursuit of environmentally sustainable economic growth."

The South Asian nation faces significant energy deficits – it imports more than 75 percent of the hydrocarbon-based fuels that it uses – even though its energy utilization is fractional compared to other countries. India consumes just 600 kilowatt-hours of electricity per person, per year, whereas industrialized nations in Europe and in North America consume an annual average of 14,000 kilowatt-hours per person. Meanwhile, India's existing civilian nuclear power program generates only 3,500 megawatts of electricity. The country hopes to boost this capacity to 30,000 to 60,000 megawatts over the next two decades. Indian authorities have estimated this expansion will cost upward of $100 billion.

Indian, American Firms Preparing to Deal

Although it is unclear whether the 123 Agreement will receive congressional approval, Indian companies are already making plans to deal with their American counterparts. GVK Power & Infrastructure Ltd., a Secundrabad-based company that focuses on urban infrastructure and power-generation projects, has confirmed that it intends to buy nuclear reactors and equipment from General Electric Co. and Westinghouse Electric Co. if and when lawmakers in Washington ratify the agreement.

The GVK is also making plans should Congress not get to the agreement before the November elections – company chairman G.V. Krishna Reddy has said that he is also negotiating separate deals with French industrial conglomerate Alstom SA and German engineering and industrial giant Siemens AG. Meanwhile, Fairfield, Conn.-based General Electric – the world's largest manufacturer of power-generation equipment – said Aug. 25 that it may lose contracts in India to French, Russian and Japanese rivals should Congress not ratify the 123 Agreement soon after it received approval from the NSG.