CODEL LOWEY SIGNALS CONGRESSIONAL SUPPORT FOR NUCLEAR DEAL

UNCLAS SECTION 01 OF 03 MUMBAI 000195

SIPDIS

SENSITIVE

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E.O. 12958: N/A
TAGS: PGOV PARM TSPL KNNP ETTC ENRG TRGY IN
SUBJECT: CODEL LOWEY SIGNALS CONGRESSIONAL SUPPORT FOR NUCLEAR DEAL
WHILE CITING CONCERNS

REF: NEW DELHI 1676

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Summary
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1. (SBU) In a meeting with the Nuclear Power Corp. of India
(NPCIL),Codel Lowey expressed general support for the planned
U.S.-India civil nuclear cooperation, yet cited concerns that
members of Congress still have about the deal. Congressman
Edward Royce told the NPCIL leadership that India must reign in
the scientists who continue to insist on a right to test nuclear
weapons. Granting India the right to test was incompatible with
U.S. law, a notion that India and its scientists must
understand, he said. Members of the delegation noted that, even
in the most optimistic projections, nuclear power would still
play a modest role in India in the future, behind even
hydropower and renewable energy. Congressman Adam Schiff said
Congress remained concerned that civil nuclear cooperation could
allow, indirectly if not directly, the diversion of resources to
India's strategic program. That, Schiff said, would be "a
disaster." S.K. Jain, NPCIL Chairman, outlined the growth plans
for nuclear power in India and argued that the percentage of
non-safeguarded reactors would fall dramatically in the coming
years, and that there was therefore no competition between civil
and military usages of India's limited uranium resources. Jain
said that, for energy security reasons, India would remain
committed to its vision of a three-stage nuclear program with a
closed fuel cycle even if the deal with the U.S. becomes
reality. The massive procurement of foreign reactor technology
will ultimately be a bridge used by India to meet the country's
surging power demand before the three-stage program becomes
reality, Jain said. End summary.

Lowey: Congress "big fans" of U.S.-India Relationship
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2. (SBU) During an April 11 meeting in Mumbai, Congresswoman
Nita Lowey told the leadership of the NPCIL that the members of
her bipartisan Congressional delegation were all "big fans" of
the U.S.-India relationship. All saw the importance of the
relationship in a changing and increasingly challenging world,
and its role in strengthening the world's non-proliferation
regime. The delegation took non-proliferation very seriously,
she said, and recognized the opportunities provided by nuclear
power, which she said was now indispensable in many parts of the
world.

Royce: India Must Reign in its Scientists
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3. (SBU) Congressman Edward Royce said that India must reign in
the small group of scientists who continued to oppose the civil
nuclear deal if the cooperation is ever to become reality. The
United States had its own experience with a military-industrial
complex interested in the development and expansion of a
military nuclear arsenal. President Eisenhower was the first
president to recognize the need to subject such scientists to
strong political and civilian control, he told S.K. Jain,
chairman of the NPCIL. A small group of Indian scientists
remained interested in expanding the country's nuclear arsenal,
and in continued testing of nuclear weapons, since that was
their job and their calling. U.S. law would never permit an
agreement that did not contain an Indian obligation to cease
testing, however, and these scientists, and India, should not
think that it can hope to get both the agreement and a continued
ability to test nuclear weapons, he said. Indian industry had a
valuable role to play in lobbying the government to reign in the
scientists, Royce told Jain. He encouraged the NPCIL and other
Indian companies to weigh in with their government to highlight
the benefits of the proposed agreement and to demonstrate the
downside that India would incur if it fails to get the agreement
because of the obduracy of its scientists and its
military-industrial complex. Jain responded by saying that
Indian industry strongly supported civil nuclear cooperation
with the U.S., and made its views clearly known to the GOI.
Private companies were interested in expanding into nuclear
power generation, and the large number of companies that supply
the NPCIL's construction activities also saw the opportunities

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opened up by the deal.

CODEL Asks About Limited Role of Nuclear Power in the Future
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4. (SBU) Lowey, Royce and Congressman Adam Schiff all inquired
about the NPCIL's expansion plans, noting that India's most
optimistic projections foresaw only a limited role of nuclear
power in the country's power mix in the future. Jain had
explained that the GOI's most recent projections foresaw a need
for 700 gigawatts (GW) of generation capacity by 2032. In this
scenario, nuclear power would contribute 63 GW or 9 percent.
Coal/gas would contribute 390 GW, hydro 150 GW and renewable
sources 97 GW. Lowey asked whether the relatively small role of
nuclear power reflected a policy decision or was governed by
other restraints. Acknowledging that 63 GW of nuclear power was
"very ambitious" and "a dream," Jain replied that the figure
reflected a capacity constraint. India could not build reactors
any faster. In any case, Jain added, the relative contribution
of nuclear power to the country's energy needs would continue to
grow rapidly in the coming years.

Final Congressional Support Depends on Text of 123 Agreement
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5. (SBU) Schiff told Jain that he supported the agreement, but
remained on the cautious side. Schiff said he didn't see much
benefit in the agreement for the U.S. except for the commercial
opportunities it opened up for U.S. companies. Still, the
agreement was important in the context of overall U.S.-India
relations. He will make his support of the final agreement
contingent on the final 123 draft and on India's agreements with
the Nuclear Suppliers Group and the IAEA. Hence his support for
the Hyde Act must be seen as a vote to allow the discussions to
go forward. Schiff said that he, and other members of Congress,
did not view India as a problem, since India had been
responsible with its nuclear program. Instead, Congress was
concerned about the impact that the U.S.-India deal could have
on the world's non-proliferation regime, and on India's ability
to expand its nuclear arsenal. In particular, it would be a
"disaster" if the agreement ultimately allowed India to expand
its military nuclear capabilities.

Separation of India's Civil and Military Programs
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6. (SBU) Schiff and staffer Thomas Sheehy asked Jain how India
was planning to separate its military and civilian nuclear
programs, and in particular whether scientists and others worked
on both programs simultaneously. Schiff said he understood that
India's indigenous sources of natural uranium were limited;
hence there must be competition between civil and military uses
of the fuel. He asked Jain whether the agreement would
ultimately free up domestic uranium resources for military use,
since the civil nuclear sector could begin purchasing uranium on
the world's markets.


7. (SBU) Jain acknowledged that in many cases the same personnel
still worked in both civil and military aspects of India's
nuclear program. He added, however, that the NPCIL was a pure
utility. It did not own the fuel it burned in its reactors.
Instead, it leased it from the GOI and returned the spent fuel
to the GOI for reprocessing or storage. All fuel purchased for
India's four safeguarded reactors remained under safeguards
after it was used, and would do so in perpetuity. Jain also
said that, when the plants currently under construction go
online, India will have 7 GW of nuclear generation capacity. Of
that, roughly 65 percent or 5 GW will come under safeguards in
accordance with the separation plan worked out with the USG,
leaving only 2 GW outside of safeguards. Looking forward, the
percentage of generation capacity not under safeguards will drop
significantly, since all imported reactors and their fuel will
be safeguarded, as will all new indigenously built pressurized
heavy water reactors. Hence in the foreseeable future roughly
90 percent of the generation capacity will be under safeguards;
the role of non-safeguarded reactors will drop, and in any case
not much fuel was needed to supply the military program. Hence

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there was no competition between the military and civilian uses
of nuclear fuel, Jain said. Schiff asked whether the planned
fast breeder reactors would come under safeguards. Jain replied
that India would put breeders under safeguards if they used
spent fuel from safeguarded reactors.

The Three-Stage Vision and Closed Fuel Cycle
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8. (SBU) The delegation inquired about India's vision of a
closed fuel cycle complete with fast breeders and ultimately
thorium reactors. Jain replied that the closed fuel cycle was
imperative for energy security reasons. India had finite
supplies of natural uranium, yet nearly unlimited supplies of
thorium. For the past 50 years it has been policy to recognize
the opportunities, and limitations, of the domestic natural
resource base and implement a closed fuel cycle that will allow
India to develop significant nuclear generation capacity without
reliance of foreign fuel. India would remain committed to the
three stage vision even after civil nuclear cooperation becomes
reality, Jain said. India views the large scale importation of
foreign reactors and fuel under the deal as a bridge, or a tool
to meet the country's growing power needs before the three stage
vision becomes reality by the middle of the century. Of the 63
GW foreseen by 2032 in the GOI's newest planning, 45 GW would
come from imported reactors, 10 GW from indigenous PHWRs and 8
GW from fast breeders. Thereafter, until the middle of the
century, the role of fast breeders will grow and the first
thorium reactors would come on line. With the three stage
program nuclear power could contribute 25 to 30 percent of the
country's power needs by 2050, Jain estimated.


9. (SBU) Codel Lowey cleared this cable.OWEN