Identifier
Created
Classification
Origin
05NEWDELHI6294
2005-08-12 11:06:00
CONFIDENTIAL
Embassy New Delhi
Cable title:  

THE US-INDIA NUCLEAR DEAL: SHAPING PUBLIC OPINION

Tags:  ENRG ETRD IN KNNP PREL IAEA US 
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E.O. 12958: DECL: 11/20/2012
TAGS: ENRG ETRD IN KNNP PREL IAEA US
SUBJECT: THE US-INDIA NUCLEAR DEAL: SHAPING PUBLIC OPINION

REF: A. NEW DELHI 5680

B. NEW DELHI 5879

C. NEW DELHI 6011

D. NEW DELHI 6079

E. NEW DELHI 4793

Classified By: SCI-COUNS M. DICAPUA FOR REASONS 1.5 (B) and (D)

C O N F I D E N T I A L NEW DELHI 006294

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PASS TO NRC

E.O. 12958: DECL: 11/20/2012
TAGS: ENRG ETRD IN KNNP PREL IAEA US
SUBJECT: THE US-INDIA NUCLEAR DEAL: SHAPING PUBLIC OPINION

REF: A. NEW DELHI 5680

B. NEW DELHI 5879

C. NEW DELHI 6011

D. NEW DELHI 6079

E. NEW DELHI 4793

Classified By: SCI-COUNS M. DICAPUA FOR REASONS 1.5 (B) and (D)


1. (C) Summary: Prime Minister Singh,s appearances before
Parliament (Ref. A, B and C) and our contacts in the Indian
scientific community allow an early assessment of how the GOI
interprets the July 18 Joint Statement (JS) on civil nuclear
cooperation and where challenges are likely to arise in
implementation. The PM views the nuclear deal as an
opportunity to achieve energy security while preserving
India,s nuclear strategic options. The separation of
civilian and military activities within the nuclear
establishment, the risk that the agreement may bring India,s
quest for nuclear self-sufficiency to an abrupt end, a
shortage of fuel for the current civilian program, and the
massive investment in an ambitious nuclear program are the
issues that the PM, members of Parliament, and analysts have
brought up. There is the distinct possibility that the Prime
Minister will announce attainment of full power of operation
of Tarapur-4 on August 15th, India's Independence Day. In
keeping with the Joint Statement issued by the President and
Prime Minister, it will be important for USG officials to
emphasize that the US and India will implement the agreement
in a phased and reciprocal manner. End Summary.

India,s Parliamentary Nuclear Debate
--------------


2. (C) PM Singh told the Lok Sabha (LS, Lower House of
Parliament) on July 29 (Ref. B) that India desires to
&attain energy security to enable us to leapfrog stages of
economic development obtained at the least possible cost.8
Singh said that nothing in the JS limits India's strategic
nuclear weapons program and assured Parliament that India
retains complete and autonomous control. Thus, Singh
rejected criticism that the JS would fatally constrain
India,s strategic options.


3. (C) Singh further assured the LS on August 3, 2005 that
the GOI will &Not allow any fissile material shortages or

any other material limitations on India,s strategic programs
in order to meet current or future requirements." Singh
reaffirmed India's commitment to the three-stage nuclear
power program consisting of Pressurized Heavy Water Reactors
(PHWRs),fast breeder reactors and thorium reactors.8
http://pmindia.nic.in/lspeech.asp?id=155

India,s Uranium Supplies Place India in a Tight Corner
-------------- --


4. (C) The public debate on the JS has brought the shortage
of natural uranium for India,s nuclear power program out in
the open. One expert, M. R. Srinivasan, says that the high
operating factors the Nuclear Power Corporation of India
Limited (NPCIL) achieved last year are starting to decline
because of inadequate supplies of natural uranium.


5. (U) According to another nuclear expert and strategic
analyst, G. Balachandran, the poor quality uranium ore at
Jaduguda in Jharkand is close to exhaustion. Mining
operations in the Nalgonda District of Andhra Pradesh and
Domiasiat at Meghalaya have not begun due to electoral
sensitivities and NGO agitation. R. Ramachandran, reports in
Frontline (12 August 2005) that the Planning Commission, in
its mid-term appraisal, states that the development of
uranium mines in India has not kept pace with the addition of
generating capacity.


6. (SBU) In agreement with Srinivasan, Ramachandran says
that the capacity factor of operating nuclear plants is being
lowered by as much as 10 percent because there may not be
sufficient fuel to upload four plants that are coming on line
(RAPS 5 and 6 and Kaiga 3 and 4). Our contact at the Atomic
Energy Regulatory Board (AERB) has confirmed that NPCIL is
now attempting to recycle fuel through several twin-unit

reactors to sustain optimal operation in a fuel-scarce
environment.


7. (U) Even Anil Kakodkar, the Chairman of the Department of
Atomic Energy (DAE),told the Energy Coordination Committee
(ECC) at its first meeting on August 6 that domestically
mined uranium is four to five times more expensive than
uranium in world markets. According to press reports,
Kakodkar (Hindustan Times, 7 August 2005) made a special
reference to the recent Indo-US JS that would enable India to
import the uranium it requires for nuclear power projects.

PM Singh Owns Up to Shortcomings of Nuclear Program
-------------- --------------


8. (U) In his Rajya Sabha (RS, Upper House of Parliament)
address, PM Singh stated, &I was a Member of the Atomic
Energy Commission, when I was Secretary in the Ministry of
Finance, way back in 1970. At that time, we had prepared a
plan to reach the target of 10,000 Megawatt for nuclear
capacity. We are today 30 years away from that period. Our
total capacity is about 3,000 Megawatt. In the next five or
six years, it can at best rise to about 6,000 Megawatt. But,
even for these, we do not have fuels. We have problems in
mining uranium in the areas where domestic deposits are
found. As far as imported fuel is concerned, once again,
because of the restrictive international regime, which the
United States and other countries have erected, we are not
able to access those sources or supplies.8

Reciprocal Cooperation Paramount in its Implementation
-------------- --------------


9. (C) Singh, in his 29 July LS address said, &Reciprocity
is key to the implementation of all the steps enumerated in
the JS. We expect a close co-relation between the actions to
be taken at appropriate points in time, consistent with our
national security interests... Hence phased action, in terms
of identification and separation of civilian nuclear
facilities based solely on our own duly calibrated national
decisions will be taken at appropriate points in time,
consistent with our national security interests.8


10. (C) In the 04 August RS debate, PM Singh said, &The
separation of civilian and military nuclear facilities, I
have been told by our nuclear establishment, can be done. I
have not studied the details, but competent observers have
told me that the Father of India's Nuclear Program, Dr. Raja
Ramanna, himself had proposed, long ago, that such a division
should be made. Our nuclear establishment has told me that
this can be done, but it will have to be done in a phased
manner. And, therefore, we put it to the US Government that
this separation will be done in a phased manner. It will be
an autonomous Indian decision as to what is 'civilian' and
what is 'military.' Nobody outside will tell us what is
'civilian' and what is 'military'.8


11. (C) Feasibility notwithstanding, the GOI will have to
meet the tangible and intangible costs associated with the
separation efforts. According to Balachandran, the tangible
costs arise from the need to establish separate facilities
for civil and military purposes where, at present, one or
more facilities may have been engaged in both types of work.
A similar issue arises with human resources where currently
there may be technical personnel who may be engaged in both
types of activities. There are also intangible costs
associated with delays that separation-of-facilities will
Qe in programs already underway.

Separation of Nuclear Facilities
--------------


12. (C) Balachandran envisions that the Indian commitment to
separate its nuclear facilities and programs into civil and
military programs, and putting civilian facilities under IAEA
safeguards could be contentious in India and a time consuming
aspect of the JS.


13. (C) Balachandran predicted that the CIRUS and Dhruva
reactors, as well as the Rare Materials Project at Mysore

will most likely fall in the military category as they
provide the basic fissile material for India's weapons
program.


14. (C) According to Balachandran, civil facilities easily
identified are the Atomic Minerals Directorate (AMD),the
Variable Energy Cyclotron Center (VECC),and the Center for
Advanced Technology (CAT),the various grant-in-aid
institutions maintained by DAE such as the Tata Institute of
Fundamental Research (TIFR),and the Tata Memorial Center.
The civilian list will likely include the two corporations
involved in the construction and operation of nuclear power
plants, NPCIL and BHAVINI, the consortium that is building
the Fast Breeder Test Reactor. The Electronics Corporation
of India Ltd. (ECIL),the Indian Rare Earth Ltd. and the
Board of Radiation and Isotope Technology are outside the
purview of safeguards and thus do not represent a problem.
Others, such as the Radiation Medicine Center, the Beryllium
Plant and the Low Radiation Research Laboratory at Kollam are
also civil in nature.

Some Components Will Present a Challenge
--------------


15. (C) According to Balachandran, three industrial
facilities with both military and civilian components are the
Uranium Corporation of India Ltd., the Heavy Water Board
(HWB),and the Nuclear Fuel Complex (NFC). Among these,
Balachandran considers that only some of the component
facilities of these entities may have to be declared as
military.


16. (C) The HWB operates seven out of India's eight heavy
water plants. Depending on requirements, only two of these
plants may need to come under the umbrella of military
facilities wiQe others designated as civilian, with
end-users being nuclear power plants.


17. (C) There are three reprocessing plants in operation, at
Trombay, Tarapur and Kalpakkam. Balachandran says that any
one of these can be designated as military and the remainder
as civilian without adversely impacting the accumulation of
fissile material for strategic purposes.


18. (C) One would be led to think that NFC can present
problems in separation of military and civilian facilities.
However, the NFC, even though not under full facility
safeguards, has come under activity specific safeguards when
it has been engaged in fabrication of fuel rods from
safeguarded imported enriched uranium fuel for the existing
Tarapur nuclear power plant.


19. (C) The Bhabha Atomic Research Center (BARC) and its
constituent establishments are engaged in both civil and
military programs. Thus, it will be the separation at the
main BARC premises at Trombay that will require some
institutional and location rearrangement. As BARC is the
cradle of India,s nuclear program, separation of military
and civilian activities at BARC may present the biggest
challenge as programs and personnel there are heavily
intertwined, according to Balachandran.

How to Deal with the Fast Breeder Reactor Program
-------------- --------------


20. (C) Indian nuclear scientists argue whether India will
be able to continue development of the fast breeder reactor
(Ref. E) and thorium fuel cycle if IAEA,s &intrusive8
inspections are put in place. Should India choose the option
to place the Prototype Fast Breeder Reactor (PFBR) program
under IAEA safeguards, this program, which is a critical
element leading to India,s civilian fissile material
self-sufficiency, would stand to benefit the most from
international cooperation. According to Balachandran,
however, putting the breeder reactor with its plutonium in
place under safeguards would remove a substantial amount of
currently unsafeguarded plutonium from weapon's program
access. In a second more farfetched option, India could
offer to place the breeder reactor under safeguards, and fuel
it with safeguarded plutonium brought from abroad. In this

scheme, India would get to retain the stock of unsafeguarded
plutonium for its weapon's program. In a third option, India
would place the breeder program in the military category.
This could cause problems downstream when the time comes to
negotiate and implement a Fissile Materials Cut-off Treaty
(FMCT).


21. (C) Balachandran told us that the PM,s commitment to
the continuity of India,s breeder program is a political
imperative. Otherwise, critics may point out that the JS
could become a backdoor approach to bring India's three stage
civil nuclear program to an end. (Comment: The breeder
program, which has yet to deliver its promise of unlimited
supplies of U233 for the civilian nuclear power program was
first formulated by the Indian nuclear pioneer, Homi Bhabha,
in 1944 and formally adopted in 1958. India has been
obsessive about the breeder program since, thus the PM
commitment to it in paragraph 3. End comment.)

Power Projections in India
--------------


22. (C) Some analysts say that India may look to global
giants in nuclear power and investment to meet energy
requirements. The 10th Plan Mid Term Appraisal Document
states that &India must seek at least 20,000 MW of
additional nuclear power capacity on a turn key basis, based
on a competitive power tariff, to be built over the next 10
to 12 years.8 Thus, some industry analysts hope that the JS
will become the catalyst to attract Foreign Direct Investment
(FDI) in India,s nuclear power sector.


23. (C) Srinivasan provided a projection of India,s energy
requirements in 2052. He indicated that the total installed
capacity will have to be about 1350 GW and total output of
8000 TW hours, which is about ten times India's installed
capacity (139 GW) and output (640 TW hours) in 2002, which
includes captive capacity. In this scenario, the nuclear
component would have to rise from the current three percent
to about 26 percent with an installed capacity of 275 GW,
about 100 times the present operating capacity. If one were
to look at 275 GW of nuclear power by 2052 at a current price
of $1.2 billion per GW for Indian pressurized heavy water
reactor units, this implies a staggering investment of $330
billion. In his Rajya Sabha address, PM Singh pointed to an
initial investment required for infrastructure of $150
billion in the next five years.


24. (C) Some analysts have gone so far as to say that the
nuclear sector should emulate the oil sector and begin to
look for resources abroad. In this scenario, India ought to
look for opportunities to acquire sites where it could
undertake uranium mining either through sole or joint
investment. In their view, these options will be the only
chance India will have to lay the groundwork for growth and
self-sufficiency of its nuclear industry.

The Role of the Private Sector
--------------


25. (U) There has been talk in the press about a possible
role of the private sector in nuclear power generation in
India. On August 4, according to press reports, (Business
Standard, 6-7 August 2005),the Chairman of Tata Power, Ratan
Tata, said that his company was ready to foray into this area
"if and when the government allowed it." As Tata had a
ringside seat during the Washington visit of PM Singh where
the JS was signed, it does not surprise us that he would be
looking at nuclear power in Indian as an area for investment.


26. (U) An editorial in The Hindu Business Line (9 August
2005) rightly suggests that now that technology barriers have
been overcome, the private sector could provide the financial
and organizational energy to move this program at a faster
pace. The editorial draws an analogy between the booming
growth of the telecom sector which "landscape has changed
unrecognizably in just ten years with energetic private
sector participation." The idea of private sector
participation in the nuclear energy field first surfaced in
November 2004 when Reliance Energy indicated that it was

looking at the possibility of setting up nuclear power
stations. Reliance officials in May also told EconCouns that
Reliance wanted to invest in the nuclear energy sector if the
GOI lifted restrictions.


27. (U) At this moment, we have yet to hear an official view
on private investments in the nuclear sector. On August 6
and 7, the Business Standard reported that the GOI is not
favorably inclined towards allowing the private sector to set
up nuclear power plants in India at the moment. The report
quotes a government official as saying "there has been a
demand from the private sector, but there is no decision to
change the present framework."


28. (U) Even the staid public sector thermal power companies
are making noises about getting into the nuclear power
generation business. According to the Hindustan Times (9
August 2005),the National Thermal Power Corporation of India
Ltd (NTPC) Chairman C. P. Jain told the media that NTPC "as a
power company, we need to look at alternate sources of fuel,
and nuclear power is definitely an area we are interested in
getting into. But there is no immediate plan."

Hunt On for India,s Nuclear Helmsman
--------------


29. (U) A helmsman will be required to steer India through
the critical period of selecting the facilities that will be
part of the military program and those that will remain on
the civilian side under safeguards. M.R. Srinivasan, in an
Op-Ed in &The Hindu8, 02 August 2005, opines that there is
a lot of work to be done in India and there are &tough
negotiations ahead with our international partners.8 In his
view, these negotiations &cannot be left to diplomats and
civil servants, and must be entrusted to acknowledged leaders
in the nuclear field.8

Limited Options for Choice of Leader
--------------


30. (U) According to Balachandran, there is no clear answer
as to who India might choose to lead the challenging task of
separating civilian and military nuclear facilities. The
internal debate will likely involve the Cabinet Committee on
Security, the National Security Advisory Board, the Atomic
Energy Commission, or an ad-hoc body created for the task.
While a leader will have to emerge to steer the process, in
Balachandran,s view, there is a shortage of nuclear experts
who can sort the technological, economic, and political
implications of decisions that JS implementation requires.
Entities such as the Institute for Defense Studies and
Analyses (IDSA) exist to elaborate the security rationale for
India's strategic programs. However they lack top leadership
who can define overarching directions for research and
analysis.

AEC Chairman Kakodkar Speaks For The Record
--------------


31. (U) Atomic Energy Commission (AEC) Chairman Anil
Kakodkar gave an interview for the record to The Hindu which
appeared on 12 August 2005. In this interview, Kakodkar, who
was part of PM Singh's delegation to the US said that:
-- A massive uranium mining program is already underway at
Banduhurang and Turamdih in Jharkhand.
-- DAE is still pursuing the issue of uranium mining at
Nalgonda with the Andhra Pradesh government and at Domiasiat
with the Meghalaya government.
-- India would reach the 10,000 MWe power level generation by
2012 with no qualification made on the availability of
natural uranium to fuel the program.
-- India would determine which facilities are civil and
military "looking at the national requirements which exist
from time to time. India's committed to this three-stage
program which will continue according to plan."
-- Growth in civilian nuclear power generation would rely on
"external inputs as additionalities."
-- The prototype fast breeder reactor will not come under
safeguards but "when technology becomes mature, it is a
different story."

-- Moreover, "any research and development program India has
will not be put under safeguards and that includes the Indira
Ghandi Centre for Atomic Research at Kalpakkam."
-- Decisions on imports of light water reactors will depend
on the financial package offered by the vendors and by how
much value addition to the projects can take place in India.

Comment: Skillful Leadership Has Kept the Debate Positive
-------------- --------------


32. (C) The President's bold proposal to engage in nuclear
cooperation with India following a series of phased
reciprocal actions has engendered a lively public debate
about the future of civil nuclear energy and the scope of
India's nuclear weapons program. The foregoing analysis
reflects the positive tone of the debate that the leadership
of PM Singh (Ref. A) has channeled into productive directions
notwithstanding some efforts to derail it (Ref. C and D). As
both sides implement the proposed nuclear agreement, it will
be crucial to continue to emphasize both publicly and
privately the intention of each side to implement the
agreement in a phased, reciprocal manner that will build
confidence and confound the skeptics.


33. (C) Our Atomic Energy Regulatory Board (AERB) contacts
told us that, as an Independence Day gift to the nation, the
PM, on August 15, will announce that the Tarapur-4 reactor
will have attained full power connection (540 MWe) to the
grid. If, indeed, such an announcement takes place, it will
be part of the PM's campaign to keep nuclear power very much
in the public eye.

BLAKE


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