Ignoring lessons of Bhopal and Chernobyl

BRAHMA CHELLANEY 

The government’s nuclear-accident liability bill seeks to burden Indian taxpayers with a huge hidden subsidy by protecting foreign reactor builders from the weight of the financial consequences of severe accidents.

The Hindu newspaper, February 16, 2010

The vaunted civil nuclear deal with the United States came into effect in 2008, with the U.S. Congress attaching a string of conditions to the ratification legislation, the Nuclear Cooperation Approval and Non-Proliferation Enhancement Act (NCANEA). The Indian Parliament was allowed no role to play, not even to examine the deal’s provisions. But having sidelined Parliament on the main deal, the government now wants it to pass a special law to provide foreign companies with liability protection in case of nuclear accidents. Such a law has been demanded by U.S. firms, which, unlike their state-owned French and Russian competitors, are in the private sector.

It is important to remember that the promises on which the deal was sold to the country have been belied, one by one. For example, Prime Minister Manmohan Singh had exulted in 2008 that the deal “marks the end … of the technology-denial regime against India.” Yet, just last month, his Defence Minister conveyed to U.S. Defence Secretary Robert Gates India’s “concerns regarding denial of export licences for various defence-related requirements of the armed forces” and other “anomalous” technology restrictions.

After the 123 Agreement was clinched, Dr. Singh told Parliament in 2007 that an “important yardstick has been met by the permanent consent for India to reprocess.” But in 2010, India is still negotiating with the U.S. to secure a right to reprocess spent fuel. The U.S., in any event, has no intention of granting India “permanent consent,” with the State Department having notified Congress that the proposed arrangements with India “will provide for withdrawal of reprocessing consent.” 

The biggest fiction, of course, was to present the deal as the answer to the country’s burgeoning energy needs. Nuclear energy cannot be a reasonable solution for any country because plants take too long to build and cost far too much. The first plant to be set up under the deal is likely to generate electricity, in the rosiest scenario, not before 2016.

In a more-plausible scenario, the timeline may stretch up to 2020, given the three reactor-exporting countries’ record. While the U.S. has built no plant in many years, Russia is still struggling to complete its much-delayed twin reactors in Kudankulam, India. As for France, its two new plants under construction, one in Finland and the other at home, are billions of dollars over budget and years behind schedule.

The bigger question, which New Delhi consistently has shied away from discussing, is about the cost of electricity from foreign-built reactors. India’s heavily-subsidised indigenous nuclear power industry is supplying electricity at between 270 and 290 paise per kilowatt hour from the reactors built since the 1990s. That price is far higher than the cost of electricity from coal-fired plants. But electricity from foreign-built nuclear reactors will be even dearer. That, in effect, will increase the burden of subsidies on the Indian taxpayers, even as the reactor imports lock India into an external-fuel dependency.

To compound matters, the government’s Civil Liability for Nuclear Damages Bill, proposed to be introduced in the upcoming Parliament session, amounts to yet another tier of state subsidy, even if a hidden one. The bill is designed to shield foreign-reactor builders from the weight of the financial consequences of severe accidents. It shifts the primary burden for accident liability from the foreign builders to the Indian state. Although its text has not yet been made public, the bill is said to cap total compensation payable in the event of a severe radioactive release at Rs. 2,250 crore ($483 million), with the liability of the foreign supplier restricted to a trifling Rs. 300 crore ($64.6 million).

That represents an Indian taxpayer subsidy to foreign firms to help slash their cost of doing business in India. Each foreign reactor will carry a price tag of several billion dollars. Given that India has agreed to award contracts specifically to U.S., French and Russian firms, each such foreign supplier is expected to build more than one twin-reactor plant. India indeed has agreed in writing to import at least 10,000 megawatts of nuclear power-generating capacity from the U.S. alone. While each such firm stands to rake in billions of dollars in profit from the Indian market, its accident liability is being capped virtually at a pittance.

The partial core meltdown almost 31 years ago at the Three Mile Island nuclear plant in Pennsylvania didn’t kill anyone, but it led to 14 years of clean-up costing $1 billion. Despite India’s own bitter experience over the Union Carbide gas catastrophe at Bhopal, the government wants the Indian taxpayers to carry the can for foreign reactor builders. Why cap liability on terms financially prejudicial to Indian interests?

Worse still, India — instead of facilitating open market competition — is seeking to protect foreign firms from the market. From procuring land for them for reactor construction to freeing them from the task of producing electricity at marketable rates, India is doing everything to rig the terms of doing business in their favour. By designating nuclear parks for foreign-built reactors, the government has reserved reactor sites exclusively but separately for the U.S., France and Russia. In the same way it has signed billions of dollars worth of arms contracts in recent years with the U.S. without any competitive bidding and transparency, New Delhi is set to award nuclear contracts on a government-to-government basis.

India’s nuclear-accident liability bill aims to help replicate what U.S. nuclear firms presently enjoy in their domestic market, where the Price-Anderson Act caps the industry’s liability for a severe radioactive release. But for each accident, the Price-Anderson liability system provides more than $10.5 billion in total potential compensation through a complex formula that includes insurance coverage carried by the reactor that suffered the accident, “retrospective premiums” from each of the covered reactors in operation in the U.S., and a 5 per cent surcharge. Washington assumes liability for any catastrophic damages from an accident only above the $10.5 billion figure (which is inflation-adjusted every five years and thus variable).

Why should a poor country like India assume liability from a ridiculously low threshold? In fact, to cover claims of personal injury and property damage in the event of a catastrophic nuclear accident, India — given the density of its population and the consequent higher risks — must also maintain a large standby compensation pool, but without the state being burdened.

Another troubling aspect of the proposed Indian legislation is that while the Price-Anderson Act permits economic (but not legal) channelling of liability, thereby allowing lawsuits against any party, New Delhi is granting foreign suppliers immunity from legal actions — however culpable they may be for an accident — by introducing legal channelling of all liability to the Indian state (which will run the foreign-built plants through its Nuclear Power Corporation of India Limited). What will it do to nuclear safety to free foreign suppliers upfront from “the precautionary principle” and “the polluter pays principle” and turn their legal liability for an accident into mere compensation, that too at an inconsequential level?

To be sure, without a cap on liability damages in India, U.S. firms would be exposed to unlimited liability. But in its effort to help create a congenial environment for them to do business in India, should the state gratuitously assume the principal financial burden in the event of an accident? The proposed Indian cap is well below international levels. Japan, for example, has boosted its plant operator liability to120 billion yen ($1.33 billion). Under the OECD’s 2004-amended Paris Convention, total liability was set at €1.5 billion ($2.04 billion), with the operator’s share being nearly half. Germany, for its part, has unlimited operator liability and demands € 2.5 billion ($3.4 billion) security from each plant’s operator.

After the 1986 Chernobyl disaster, with its transboundary consequences, international efforts were initiated to harmonise rules on liability and compensation. But those efforts have been stymied by the failure to bring all relevant international instruments into force. States with a majority of the world’s present 436 nuclear power reactors are not yet party to any international liability convention. Many countries still maintain a “wait and see” approach. For example, China, Japan and the U.S. are not party to any international liability convention, while Russia — a party to the Vienna Convention since 2005 — has refused to pass legislation to waive or cap accident liability for its foreign suppliers. China has yet to erect a formal domestic liability regime, although its State Council in 1986 issued an administrative legal document as an “interim” liability measure.

When a number of nuclear-generating countries are yet to adopt domestic legislation in this field, let alone ratify international conventions, why is New Delhi in a rush to pass a bill that caps liability on terms weighted in favour of foreign suppliers? Parliament indeed should seize the opportunity offered by the liability bill to scrutinise the nuclear deal in its entirety.

(c) The Hindu, 2010.

Book Review Essay

International Relations of Asia

David Shambaugh and Michael Yahuda, eds. (2008) Lanham, MD: Rowman and Littlefield

Anil Kumar P

The regional order in Asia today still bears many of the hall marks that have characterised it for a number of decades: the American presence and alliance system, a rising China, an uncertain Japan, a divided Korea, China-Taiwan and the existence of security dilemmas, entrenched nationalism, dynamic economic growth, educated societies and disciplined work forces. These characteristics continue to distinguish Asian international relations. But in addition to the persistence of these traditional features, a variety of new features have also appeared that are reshaping the regional dynamics and creating a new regional order. These include the rise of India, a re-engaged Russia; the rebalancing of major power relations; the growth of intraregional and extra regional multilateral institutions and forums; the growing impact of “soft power” in intercultural relations; the ascent of political and radical Islam; the advent of terrorism; the rise of various “non-traditional” security threats; the growing danger of separatist movements; ( in China, India, Indonesia and Sri Lanka) and the increased military modernization across the region. Thus Asian international relations also reflect these relatively new phenomena - all of which have added to their complexity and diversity. Analyzing all these issues through a single volume is a difficult task as far as any scholar of the field is concerned.  David Shambaugh and Michael Yahuda have drawn together a stellar cast of some of the brightest and most thoughtful analysts and practitioners from Asia, Europe, and North America. The result is a compendium which is intellectually stimulating, organizationally well-structured, and analytically sensible, helping us grasp the remarkable dynamism of international relations across Asia today. The emergence of new issues about the region makes the task of teaching non-specialists about the region a daunting task. Moreover, the recent wave of literature on Asian security and foreign relations has done little to alleviate this difficulty. Simply stated, most of this work has been weighed down with an over-reliance on academic jargon and a disproportionate amount of attention to divisive policy debates. As a result, it has been of limited utility for those (whether in the classroom or the halls of power) in need of a balanced overview of the region. David Shambaugh and Michael Yahuda’s International Relations of Asia goes a long way toward rectifying this situation.

This edited work have seven sections, which contains sixteen essays by leading scholars combine interpretive richness and factual depth. Taken together, they provide a one-stop education on the dynamics of the globe's most dynamic region. The first section of the book begins with Shambaugh’s introductory chapter International Relations in Asia: The two- level game. According to him international relations in Asia are changing in many significant ways and at two principal levels: state-to-state and society-to-society. As a consequence a new regional system is emerging. While the governments in Asia interact and co-operate on many issues, they still evince suspicious and occasional tensions. Major power interactions remain volatile. Yet at a second level, the societies of the region are interconnected to an unprecedented degree. To some extent this interdependence acts as a buffer against potential interstate rivalry and conflict. This introductory chapter explicates these two levels for understanding international relations in Asia today.

The subsequent chapters in this volume are all testimony to the old and new dynamics of the region. The contributions address the traditional and changing role of external powers (the Unites States, Europe and Russia), regional powers (China and Japan), and the emergence of new actors ( India, Australia, Central Asia); the role of ASEAN, the Shanghai Co-Operation Organization, and the gradually emerging multilateral regional architecture; the troublesome Korean peninsula; and the three important functional features of the emerging regional order: economics, globalisation, and regional security. Even though the chapters raise and elaborate different components of the emerging regional system in Asia, the reminder of the introduction by David Shambaugh provides his own sense of the dominant macro trends in foreign policy.

In the next two chapters, Samuel Kim and Amitav Acharya, respectively, place contemporary international relations in Asia in both historical and theoretical perspective. Prof.Kim in his article The Evolving System: Three Transformations, analyses the historical overview of the “Asian” international system as it evolved and mutated through three systemic transformations from the early nineteenth century to the end of the cold war. The first four sections of his article critically apprises the main features of the Chinese tribute system as well as its progressive unraveling from the opium war of 1839-1842 to the Sino-Japanese war of 1894-1895. The second section examines the rise and fall of the Japanese imperial system from the end of the Sino-Japanese war in 1895 to the end of the World War II in 1945. The third section examines the rise and demise of the cold War system (1947-1989). The fourth and concluding section looks at the impact and implications of these three systemic transformations for the future of Asian international relations in the post-Cold war world. Taken together these three transformations, there is no past can serve as desirable and feasible guide for the future of Asian international relations. Both the Japanese imperial system and the Clod War system reflected a sharp break from their predecessors. The emerging post cold war Asian system also represents a discontinuity from the three past systems tracked and analyzed in this study.

Amitav Acharya in his chapter Theoretical Perspectives on International Relations in Asia argued that any discussion of theoretical perspectives on the international relations in Asia confronts the paradox that much of the available literature on the subject remains atheoritical. Even among those writers on Asian international relations who are theoretically oriented, disagreement persists as to whether international relations theory is relevant to studying Asia, given its origin in, and close association with, western historical traditions, intellectual discourses, and foreign policy practices. While Samuel Kim’s chapter looks at the historical underpinnings of the current Asian order, Amitav Acharya’s contribution considers the utility of applying differing strands of international relations theorizing to the region. While both chapters were written by well-known experts in the field, they suffer to a certain degree from failing to fully engage Shambaugh’s opening observations about the necessity to include different levels of analysis in describing and explaining contemporary Asian international relations. Fortunately, in composite, the rest of the volume more fully explores the empirical realities of such a proposition.

The strength of the book lies in the generally informative case studies. Section three focuses on the major powers in the region. Such a survey begins with a consideration of the role external powers play in Asia. This discussion is led by Robert Sutter’s concise assessment of American policies toward the region. In the chapter The United States in Asia, Sutter examines significant challenges to U.S interests and influence in Asia at the start of the twenty-first century and it then discerns to enduring U.S strengths, forecasts durable American regional leadership, and considers alternative out comes. According to the author the Asian “hedging” reinforces U.S leadership in the region. Sutter’s observations are complemented by Sebastian Bersick’s description of Europe’s place in Asia. In the chapter Europe in Asia author traced the fact that European Union and its members are the natural partners of an Asian region that seeks to develop a regional system which transcends the perceptions, concepts and behaviour patterns of the Cold War. He also analysing the role of China, India, Japan and ASEAN in this particular context. According to the author European Union is neither pursuing a containment strategy nor a balancing strategy with regard to the development of a new regional system in Asia. Instead Europeans are convinced that regional integration and interregional cooperation are important instruments in promoting their economic interests Vis-à-vis Asia as well as their interest in a stable regional security environment.

Section four of the book contains three important chapters on the regional powers of Asia. Phillip C Saunders chapter on China’s Role in Asia argues that China’s reassurance strategy has been remarkably successful in preserving a stable regional environment and persuading its neighbours to view China as an opportunity rather than a threat. However, despite China’s restrained and constructive regional behaviour over the last decade, significant concerns remain about how stronger and less constrained China might behave in the future. Sumit Ganguly in his chapter on The Rise of India in Asia examines the transformation of India’s grand strategy in the post cold war era and the reactions of other major powers in Asia and assess the possibilities and limits of India’s emergence as a great power. The central argument of this chapter is that India aspires to be a major Asian power and is pursuing hedging strategy against the Peoples’ Republic of China, its most likely and keenest competitor for a similar status in Asia. The chapter also contends that while other major states in Asia are not concerned or distressed with India’s rise, the PRC does view India’s attempt to break free from its sub continental status with growing concern. Sumit Ganguly’s in-depth analysis is an excellent contribution to this section. Michael Green’s chapter on Japan in Asia is dedicated to the analysis of Japan’s relations with China, Korean Peninsula, U.S-Japan alliance in Asia’s strategy, strength and weakness of Japan’s diplomacy etc. This chapter ends with the observation that Japan’s security environment and strategic trajectory will be determined by the structure of power relations with the nature of economic interdependence and institution building.

The following two sections of the volume move discussion in the direction of other factors and influences that play within the emerging Asian foreign policy and security dynamic. Section five considers “sub-regional” actors of the region. This section contains four chapters. Sheldon W Simon’s chapter on ASEAN and the New Regional Multilateralism explores ASEAN’s evolution, current position of and its multilateralism. Huge White’s Chapter on Australia in Asia analyses the changing nature of its power relations in the context of emerging China. Martha Brill Olcott in the chapter Central Asia traces the changes that have occurred in Central Asia in the context of the disintegration of the Soviet Union and ‘Great Game’. Scott Synder in his chapter on The Korean Peninsula and North Eastern Stability explores how the North Korean nuclear issue has been a catalyst for ad hoc multi literalism in Northeast Asia. This chapter also analyses the prospects for regional rivalry between China, Japan and Korea. While the chapters in this section are informative, the conceptual focus of this part of the book is somewhat muddled as there is a confusing tendency throughout to slide between reviewing nascent international institution building (with reference to ASEAN, the SCO and the six-party talks) and more diffused discussion of the emerging relationship in Asia between weaker and stronger states.

Section six of the book intended to bring attention to transnational linkages via an introduction to regional economic and security flows. All the three chapters of this section are important in the sense that they are addressing the economic, security and geopolitical aspects, its trans-regional linkages and regional dynamic. Edward J. Lincoln’s chapter on The Asian Regional Economy addresses the economic landscape, trade flows and its expanding experience in the region. Nayan Chanda’s chapter on Globalization and International Politics in Asia analyses new players in economy and security due to globalisation. He started from migrants and tourists   and moving through NGOs, other new non-state actors. His analysis on cyberspace as the new arena of contestation is significant in this context. Ralph A. Cossa’s thought provoking chapter Security Dynamics in Asia explores the geopolitics and regional institutions. It analyses the role of ASEAN, APEC, ARF etc. The concluding section of the book is written by Michael Yahuda, in which he writes about a new order in Asia in the context of a declining United States. He concluded by writing that “the main determinant of the evolution of Asian international relations in the immediate future will be the relative strength and endurance of Unite Sates. China can be expected to continue to rise and to increase its influence, but the key question will be how the United States responds and how the other Asian states appraise that response”.

In sum, while International Relations of Asia is the product of a prestigious group of specialists, it is neither overly academic nor excessively caught up in specific policy issues. Rather, it is informative, nuanced, and insightful. More broadly, it is ideally suited as a primer for anyone with a budding interest in the complex security and foreign policy dynamic taking shape in the region.