NPCIL TELLS SEN. SPECTER THAT IT APPLAUDS NUCLEAR LAW, YET

UNCLAS SECTION 01 OF 03 MUMBAI 002075 SIPDIS SENSITIVE SIPDIS DEPT. OF ENERGY FOR U/S GARMAN, S. JOHNSON, T. CUTLER, A. SCHEINEMAN DEPT OF COMMERCE FOR U/S F. LAVIN, A/S VINEYARD,J.NEUHOF E.O. 12958: N/A TAGS: PREL PARM TSPL KNNP ETTC ENRG TRGY PGOV ECON BEXP, IN SUBJECT: NPCIL TELLS SEN. SPECTER THAT IT APPLAUDS NUCLEAR LAW, YET CITES SCIENTISTS' CONCERNS REF: MUMBAI 2064 MUMBAI 00002075 001.2 OF 003 Summary -------------- ¶1. (SBU) S.K. Agrawal, director of projects at the Nuclear Power Corporation of India (NPCIL),told Senator Arlen Specter on December 16 that the civil nuclear law passed by Congress would not restrict the company's expansion plans. Without the agreement, the NPCIL's growth would even be slower and limited in the near to mid-term, he said. Agrawal was reacting to public statements, made a day earlier by retired Indian nuclear scientists, that the law prevented "full nuclear cooperation" with the U.S. The scientists' concerns were real but did not affect the NPCIL because the company was not involved in the enrichment or reprocessing of fuel, he said. Agrawal urged the U.S. to take the scientists' concerns seriously since they reflected widespread public sentiment and would influence the domestic debate on the agreement. The scientists were mainly concerned about the restrictions on enrichment and nuclear testing, and on Iran, Agrawal said. Specter said the U.S. supported India's emergence as a world power, and saw civil nuclear cooperation as a tool to strengthen the bilateral relationship. Diversion of imported fuel to military purposes remained a concern for the U.S., as did India's relationship with Iran, Specter said. End summary. NPCIL "Euphoric", But Others Are Concerned -------------- ¶2. (SBU) Agrawal told Senator Arlen Specter on December 16 that the NPCIL was "euphoric" at the passage of the civil nuclear legislation. The final version of the bill would "in no way" restrict the expansion plans of the NPCIL, Agrawal emphasized. Anil Kakodkar, secretary of the Department of Atomic Energy (DAE) and chairman of the Atomic Energy Commission, shared these views, Agrawal added. ¶3. (SBU) While the NPCIL had no issues with the legislation, others within the country's nuclear establishment clearly did, Agrawal said. He referred to local press reports of a December 15 meeting between retired nuclear scientists and Kakodkar. According to press reports, the scientists told Kakodkar that the bill would prevent "full nuclear cooperation." The scientists' were concerned with the restrictions the law placed on India's ability to reprocess any fuel it imports, Agrawal told Specter. Many felt that the agreement would give India far less flexibility than it has today. However, the NPCIL was not involved in either the enrichment or reprocessing of nuclear fuel, he said, and hence it had no issues with the legislation. It leased all its fuel from other DAE-controlled companies and returned the spent fuel back to the DAE for further use, he added. Scientists' Concerns Reflect Public Sentiment, Agrawal Argues MUMBAI 00002075 002.2 OF 003 -------------- ¶4. (SBU) Agrawal said the scientists' statements were a reflection of a domestic sentiment. There was continued general concern among the "people" about what the agreement meant for India, Agrawal said. Many were fearful that the deal would tie India down, prevent it from protecting itself, or bring the country too closely into the orbit of the U.S., he added. The U.S. should take the scientists' concerns seriously, as they would play a role in the further domestic debate on the legislation. In addition to the restrictions on reprocessing of fuel, the scientists were mainly concerned with the provisions on further nuclear testing and on Iran, he said. ¶5. (SBU) On Iran, Specter told Agrawal that the U.S. continued to expect Indian support of the worldwide effort to prevent Iran from acquiring nuclear weapons. Agrawal said India agreed that Iran should not acquire nuclear weapons, but the provisions of the nuclear deal "were not necessary." India had always been a responsible state with regard to non-proliferation, and many in India did not understand why the U.S. was insistent on linking Iran to the civil nuclear deal. Many people asked why the U.S. was not as insistent that Pakistan stop manufacturing nuclear weapons. Specter replied that, if it could, the U.S. would get Pakistan to eliminate its nuclear arsenal. Like Iran, Pakistan did not have a good non-proliferation record, Specter said, but unlike Iran it was not a state sponsor of terrorism, it did not advocate the destruction of Israel and it did not support groups like Hezbollah. Specter: Law Important Milestone -------------- ¶6. (SBU) Specter told Agrawal that the agreement marked a historic milestone in U.S.-Indian relations. The U.S. greeted India's emergence as a world power. The U.S. understood India's energy needs. For the U.S., the agreement was a tool to help meet those needs, but it was also an instrument to create closer ties as a whole. The U.S. understood the potential for commercial nuclear ties between the two countries. At the same time, the U.S. wanted continued assurances that civil nuclear technology and fuel would not be used for military purposes. NPCIL: Without Deal, Growth Limited in Short Term -------------- -------------- ¶7. (SBU) Agrawal gave Specter an overview of the NPCIL's expansion plans (see reftel). Specter asked Agrawal whether India needed the civil nuclear agreement to meet its ambitious expansion plans. Agrawal said the agreement would allow the NPCIL to grow faster, because it would allow the company to MUMBAI 00002075 003.2 OF 003 augment its indigenous program with foreign technology. Without the agreement, growth would be slower and limited in the short term, since the country had only finite reserves of natural uranium to fuel its indigenously built reactors, and because the planned establishment of a closed fuel cycle with its fast breeders and thorium reactors would still take many years to become reality. (Note: In earlier discussions, the NPCIL admitted that it needed to import roughly 6-8 reactors to reach its goal, formulated before the July 18 joint statement, of creating 20 gigawatts of generation capacity by 2020. End note). Agrawal said India's vision of a closed fuel cycle was "very clear." India had a concrete policy to reprocess spent fuel from its pressurized heavy water reactors (PHWR) for the planned fast breeders. The more PHWRs and light water reactors it had, the more fuel it could channel to its planned fast breeders, he said. ¶8. (U) Senator Specter's staff cleared this cable. KAUFFMAN