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Canada and India agree on nuclear cooperation deal November 20, 2012

Posted by nishankmotwani in : Future Directions International, Guest authors, India , trackback

Liam McHugh

Ottawa and New Delhi have completed negotiations, commenced in 2010, to ratify a nuclear agreement. This may ultimately result in Canadian firms exporting uranium and nuclear infrastructure to the energy-poor South Asian state.

Background

Canada has followed Australia and concluded a civil nuclear deal with India, which has been in development since 2010. The latest uranium agreement is indicative of India’s strategic energy policy, emphasising nuclear power to moderate energy shortfalls. The challenge for New Delhi now will be to complement well-executed diplomacy, with supportive domestic legislation.

Comment

India and Canada have agreed terms for a civil nuclear cooperation programme. Following a high-level visit to India in early-November, which included Canadian Prime Minister Stephen Harper, Ottawa and New Delhi, announced a breakthrough on administrative arrangements for a uranium pact, originally drafted in 2010. Once it is implemented, Canadian firms will be able to export uranium to India’s growing nuclear capacity.

The Indo-Canadian agreement is a landmark in energy relations. The proposed arrangement will end a three-decade long embargo on nuclear cooperation. Ottawa ended previous collaboration following the detonation in 1974 of India’s first nuclear device, Smiling Buddha, which allegedly used material from a Canadian built reactor. Since then, relations between the two states have been complex, highlighted by the protracted negotiations on this current deal.

The agreement with Canada is notable, as it further portrays international perceptions of India as a responsible nuclear stakeholder. Although operating outside the multilateral agreements, fears over increased nuclear proliferation from India’s nuclear programme have failed to materialise. India has proven to be a responsible stakeholder in the nuclear domain and has abided by guidelines from the NPT, even as a non-signatory.

More cynically, the agreement may be an attempt by Canada to bolster potentially flagging demand for uranium. The nuclear industry has faced increasing scrutiny following the 2011 Fukushima incident; many European states have developed strategies to phase out nuclear power. Across Asia many proposed nuclear powered states have expressed uncertainty about future programmes. India stands as one of the few states expanding its use of nuclear power. Future Indian demand for uranium would moderate any potential shortfall from key markets, such as Japan and Europe.

The uranium cooperation programme also reflects India’s strategic energy policy. Energy security, as highlighted by the power outage in July 2012, represents one of India’s critical national security challenges; it has an estimated 400 million people without access to electricity. To achieve sustained economic growth, a number of energy challenges must be resolved, including: securing reliable long-term sources of energy, meeting electricity supply and demand to satisfy the nation’s rising industries and rural settlements, and developing new energy infrastructure. It is clear that with Canadian support and the Australian uranium supply deal in October, New Delhi regards nuclear energy as a key factor in resolving current deficits and satisfying future demand. This will relegate alternative technologies, such as thorium, to the periphery. Similarly, a uranium platform does not bode well for renewable energy.

The Indo-Canadian agreement may generate concern in Canberra. While Australia boasts a strategic share of global uranium reserves, its market is not as advanced as those of other suppliers. Moreover, unlike Canada, Australia does not operate across the spectrum of a civilian nuclear industry. Canadian companies are involved in operations from uranium extraction to the construction of reactors, an area of expertise in which India requires a great deal of support. Recent agreements with France and South Korea may further marginalise Australia’s role in the Indian energy industry.

Yet, as is often the case in India, while agreements exist in the upper echelons of government, practicalities may stymie development. Canada’s largest engineering firm, SNC Lavalin, expressed concern over India’s nuclear liability rules. The Indian Civil Liability for Nuclear Damages Act and related legislation places the onus for damages on the company rather than the state, contrary to standard international practice.

Liam McHugh is manager of the Northern Australia and Energy Security Research Programmes at Future Directions International.

This post first appeared on Future Directions International on 14 November 2012.

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