The 123 Agreement signed between the United States of America and India is known as the U.S.–India Civil Nuclear Agreement or Indo-US nuclear deal. The framework for this agreement was a July 18, 2005, joint statement by then Indian Prime Minister Manmohan Singh and then U.S. President George W. Bush, under which India agreed to separate its civil and military nuclear facilities and to place all its civil nuclear facilities under International Atomic Energy Agency (IAEA) safeguards and, in exchange, the United States agreed to work toward full civil nuclear cooperation with India.
This U.S.-India deal took more than three years to come to fruition as it had to go through several complex stages, including amendment of U.S. domestic law, especially the Atomic Energy Act of 1954, a civil-military nuclear Separation Plan in India, an India-IAEA safeguards (inspections) agreement and the grant of an exemption for India by the Nuclear Suppliers Group, an export-control cartel that had been formed mainly in response to India's first nuclear test in 1974. In its final shape, the deal places under permanent safeguards those nuclear facilities that India has identified as "civil" and permits broad civil nuclear cooperation, while excluding the transfer of "sensitive" equipment and technologies, including civil enrichment and reprocessing items even under IAEA safeguards. On August 18, 2008, the IAEA Board of Governors approved, and on February 2, 2009, India signed an India-specific safeguards agreement with the IAEA. After India brought this agreement into force, inspections began in a phased manner on the 35 civilian nuclear installations India has identified in its Separation Plan. The deal is seen as a watershed in U.S.-India relations and introduces a new aspect to international nonproliferation efforts.
On August 1, 2008, the IAEA approved the safeguards agreement with India, after which the United States approached the Nuclear Suppliers Group (NSG) to grant a waiver to India to commence civilian nuclear trade. The 48-nation NSG granted the waiver to India on September 6, 2008, allowing it to access civilian nuclear technology and fuel from other countries. The implementation of this waiver made India the only known country with nuclear weapons which is not a party to the Non-Proliferation Treaty (NPT) but is still allowed to carry out nuclear commerce with the rest of the world.
The U.S. House of Representatives passed the bill to approve the deal on September 28, 2008. Two days later, India and France signed a similar nuclear pact making France the first country to have such an agreement with India. On October 1, 2008, the U.S. Senate also approved the civilian nuclear agreement allowing India to purchase nuclear fuel and technology from—and sell them to—the United States. U.S. president, George W. Bush, signed the legislation on the Indo-US nuclear deal, approved by the U.S. Congress, into law, now called the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act, on October 8, 2008. The agreement was signed by then Indian External Affairs Minister Pranab Mukherjee and his counterpart then Secretary of State Condoleezza Rice, on October 10.Done Deal: India, US seal landmark nuclear pact CNN-IBN
In 2015, the agreement had still not been fully implemented.
In 2016, the countries agreed to build 6 US-designed reactors in India.
Overview
The Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, also known as the Hyde Act, is the U.S. domestic law that modifies the requirements of Section 123 of the U.S. Atomic Energy Act to permit nuclear cooperation with India and in particular to negotiate a 123 Agreement to operationalize the 2005 Joint Statement., 109th Cong. (2006). As a domestic U.S. law, the Hyde Act is binding on the United States. The Hyde Act cannot be binding on India's sovereign decisions although it can be construed as prescriptive for future U.S. reactions. As per the Vienna Convention, an international agreement such as the 123 Agreement cannot be superseded by an internal law such as the Hyde Act.
The 123 agreement defines the terms and conditions for bilateral civilian nuclear cooperation, and requires separate approvals by the U.S. Congress and by Indian cabinet ministers. The agreement will also help India meet its goal of adding 25,000 MW of nuclear power capacity through imports of nuclear reactors and fuel by 2020.
After the terms of the 123 agreement were concluded on July 27, 2007, it ran into trouble because of stiff opposition in India from the communist allies of the ruling United Progressive Alliance. The government survived a confidence vote in the parliament on July 22, 2008, by 275–256 votes in the backdrop of defections by some parties. The deal also had faced opposition from non-proliferation activists, anti-nuclear organisations, and some states within the Nuclear Suppliers Group. In February 2008, U.S. Secretary of State Condoleezza Rice said that any agreement would be "consistent with the obligations of the Hyde Act". The bill was signed on October 8, 2008.
Background Parties to the Non-Proliferation Treaty (NPT) have a recognized right of access to peaceful uses of nuclear energy and an obligation to cooperate on civilian nuclear technology. Separately, the Nuclear Suppliers Group has agreed on guidelines for nuclear exports, including reactors and fuel. Those guidelines condition such exports on comprehensive safeguards by the International Atomic Energy Agency, which are designed to verify that nuclear energy is not diverted from peaceful use to weapons programs. Though neither India, Israel, nor Pakistan have signed the NPT, India argues that instead of addressing the central objective of universal and comprehensive non-proliferation, the treaty creates a club of "nuclear haves" and a larger group of "nuclear have-nots" by restricting the legal possession of nuclear weapons to those states that tested them before 1967, who alone are free to possess and multiply their nuclear stockpiles. India insists on a comprehensive action plan for a nuclear-free world within a specific time-frame and has also adopted a voluntary "no first use policy".
Led by the U.S., other states have set up an informal group, the Nuclear Suppliers Group (NSG), to control exports of nuclear materials, equipment and technology. Consequently, India was left outside the international nuclear order, which forced India to develop its own resources for each stage of the nuclear fuel cycle and power generation, including next generation reactors such as fast breeder reactors and a thorium breeder reactor known as the Advanced Heavy Water Reactor. In addition to impelling India to achieve success in developing these new reactor technologies, the sanctions also provided India with the impetus to continue developing its own nuclear weapons technology with a specific goal of achieving self-sufficiency for all key components for weapons design, testing and production.
Given that India is estimated to possess reserves of about 80,000–112,369 tons of uranium, India has more than enough fissile material to supply its nuclear weapons program, even if it restricted Plutonium production to only 8 of the country's 17 current reactors, and then further restricted Plutonium production to only 1/4 of the fuel core of these reactors. According to the calculations of one of the key advisers to the US Nuclear deal negotiating team, Ashley Tellis:
Operating India's eight unsafeguarded PHWRs in such a [conservative] regime would bequeath New Delhi with some 12,135–13,370 kilograms of weapons-grade plutonium, which is sufficient to produce between 2,023–2,228 nuclear weapons over and above those already existing in the Indian arsenal. Although no Indian analyst, let alone a policy maker, has ever advocated any nuclear inventory that even remotely approximates such numbers, this heuristic exercise confirms that New Delhi has the capability to produce a gigantic nuclear arsenal while subsisting well within the lowest estimates of its known uranium reserves.
However, because the amount of nuclear fuel required for the electricity generation sector is far greater than that required to maintain a nuclear weapons program, and since India's estimated reserve of uranium represents only 1% of the world's known uranium reserves, the NSG's uranium export restrictions mainly affected Indian nuclear power generation capacity. Specifically, the NSG sanctions challenge India's long-term plans to expand and fuel its civilian nuclear power generation capacity from its current output of about 4GWe (GigaWatt electricity) to a power output of 20GWe by 2020; assuming the planned expansion used conventional Uranium/Plutonium fueled heavy water and light water nuclear power plants.
Consequently, India's nuclear isolation constrained expansion of its civil nuclear program, but left India relatively immune to foreign reactions to a prospective nuclear test. Partly for this reason, but mainly due to continued unchecked covert nuclear and missile proliferation activities between Pakistan, China and North Korea, India conducted five more nuclear tests in May 1998 at Pokhran.
India was subject to international sanctions after its May 1998 nuclear tests. However, due to the size of the Indian economy and its relatively large domestic sector, these sanctions had little impact on India, with Indian GDP growth increasing from 4.8% in 1997–1998 (prior to sanctions) to 6.6% (during sanctions) in 1998–1999. Consequently, at the end of 2001, the Bush administration decided to drop all sanctions on India. Although India achieved its strategic objectives from the Pokhran nuclear tests in 1998, it continued to find its civil nuclear program isolated internationally.
Rationale behind the agreement
Nuclear non-proliferation The proposed civil nuclear agreement implicitly recognizes India's "de facto" status even without signing the NPT. The Bush administration justifies a nuclear pact with India arguing that it is important in helping to advance the non-proliferation framework by formally recognizing India's strong non-proliferation record even though it has not signed the NPT. The former Under Secretary of State for Political Affairs, Nicholas Burns, one of the architects of the Indo-U.S. nuclear deal said "India's trust, its credibility, the fact that it has promised to create a state-of-the-art facility, monitored by the IAEA, to begin a new export control regime in place, because it has not proliferated the nuclear technology, we can't say that about Pakistan." when asked whether the U.S. would offer a nuclear deal with Pakistan on the lines of the Indo-U.S. deal. Mohamed ElBaradei, former head of the International Atomic Energy Agency, which would be in charge of inspecting India's civilian reactors has praised the deal as "it would also bring India closer as an important partner in the nonproliferation regime". The reaction in the U.S. led academic community was mixed. While some authors praised the agreement as bringing India closer to the NPT regime, others argued that it gave India too much leeway in determining which facilities were to be safeguarded and that it effectively rewarded India for continuously refusing to accede to the Non-Proliferation Treaty.
Economic considerations In India, the proponents of the agreement cite economic considerations as one of the topmost factors in their support of the agreement. For example, Indian scholar Rejaul Karim Laskar argues, "the most important significance of the deal for India (is) related to the contribution it will make in meeting India's energy requirements to sustain high rate of economic growth". Financially, the U.S. also expects that such a deal could spur India's economic growth and bring in $150 billion in the next decade for nuclear power plants, of which the U.S. wants a share.