General Electric

After the “clean waiver” in Vienna

According the the Nuclear Suppliers Group, its guidelines “are implemented by each NSG participant in accordance with its national laws and practices. Decisions on export applications are taken at the national level in accordance with national export licensing requirements. This is the prerogative and right of all States for all export decisions in any field of commercial activity and is also in line with the text of Article III.2 of the NPT…” To understand what this will mean in practice, just read this report from Bloomberg.

The waiver means that companies including France’s Areva SA, Russia’s Rosatom Corp. and Japan’s Toshiba Corp. will be able to export nuclear equipment to India. General Electric Co. and other U.S. companies will have to wait until Congress ratifies a 2006 trade pact backed by President George W. Bush and Indian Prime Minister Manmohan Singh.

General Electric, the world’s biggest maker of energy- generation equipment, said Aug. 25 that it may lose contracts in India to French, Russian and Japanese rivals if Congress doesn’t ratify a U.S.-India nuclear deal soon after the agreement wins approval from the Suppliers Group.

Rice said the U.S. has talked to India about the potential competitive disadvantage.

“I think they recognize and appreciate American leadership on this issue,” she said. “Because of that I think we’ll have ways to talk them about not disadvantaging American companies.”

Still, she said “the best thing would be to get it through Congress.” [Bloomberg]

It is understood that there is a tacit agreement that the first commercial deals will involve US companies…as long as the US Congress does not prevent it. The non-proliferation ayatollahs are up against the General Electrics on this one.

As for the Indian government, the real job begins once the party is over. Negotiating the nuclear deal with the United States, IAEA and the NSG was the easy part. The hard part involves liberalising the power industry. See energy security begins at home; Mr Advani sees the light and the uranium at home.

Related Link: The problems with India’s power industry regulations. The NSG saga covered at Idaho Samizdat.

11 thoughts on “General Electric”

  1. If anyone studies the American Politics, one can clearly see the influence of Corporations on American Gov’t. It wouldn’t be too foolish to say that American is a Corporatocracy rather than Democracy.

    So, going by that premise it is foolish to even think that American Parliament (Congress) wouldn’t pass the legislation to allow American Companies to do business. It just doesn’t make any business sense.

    No one has yet satisfactarily answered the question, as to why US is batting for India in NSG, against so many adversaries. Why is US spending is political capital on India? I believe answer lies in the American Businesses lobby which expects to get $300 Billion worth of business out of India through this deal.

    This deal is purely and simply a deal for American Businesses. Just like Iraq war is for Oil, and other things like WMD, “Liberation”, “Spread of Democracy” were smoke screens.

    However, the part that worries me most is that India Government has played straight into the America’s 3 decade old game of building leverages on nations. If one reads the book “Confessions of an Economic Hitmen”, they will clearly see the same pattern of deciet played by american against governments in South America and South East Asia.

    What is the pattern? First, Americans sell pipe dreams about big infrastructure projects i.e. Energy. Then they force Governments to buy goods from American companies. Now to buy good from Americans, those government need money. Where is India going to get those $300 Billions? From WordBank and IMF ofcourse, which will be in turn funded by America.

    Since, Indian will not be able to pay back the loans considering the Electricity situation in India, American will continue to build leverage on India. Besides, threating India with dire consequences of 123 Agreement on every thing going forward from now on.

  2. To offset this advantage that other countries would gain over the US owing to the additional requirement for a Congressional waiver, Siddharth Varadarajan reported in July in The Hindu that the US had arrived at a tacit understanding with them. I quote here his words:

    “…By insisting that the NSG act first, he said, India would be free to access nuclear supplies from elsewhere even if the U.S. Congress were to shoot down or delay ratification of the 123 Agreement.

    Partly in order to deal with this problem, the U.S. is believed to have secured a “political understanding” from Russia and France that they would not rush to conclude export deals with India as soon as the NSG waiver comes through and would wait till Congress has the chance to ratify the 123 Agreement.”

    If there is in addition to this a tacit agreement with India itself to give the US a competitive advantage, clearly the US has made sure that it will win the lion’s share of the benefits that are expected to flow from this agreement.

  3. ‘Negotiating the nuclear deal with the United States, IAEA and the NSG was the easy part.’

    Easy part? Going by recent events I don’t think so. Agreed MMS and Sonia are not exactly what this country wants, but give MMS and his team credit where it’s due, man!

    Cupid:

    Obviously the US (like any other country) would want leverage their position in return for their support to India for the accord!

  4. Sanjeev:

    Take a hard and deep look into history. What do you see? Politics [and therefore, governance] has always been influenced by special interests – in particular, religion and commerce. The previous post on this blog illustrates the case in point. Quid pro quo is the staple food at the Foggy Bottom, as it is in the South Block.

    What do you think? George Bush visits India to push America, Inc,, but Hu Jintao, Nicolas Sarkozy, Mahmoud Ahmadinejad, and Vladimir Putin, only to see Taj Mahal , pay homage to Mahatma Gandhi, and eradicate poverty?

  5. Dear Sanjeev,

    >>believe answer lies in the American Businesses lobby which expects to get $300 Billion worth of business out of India through this deal.

    If that is the reason why America wants this deal, and not to cap and rollback our weapons programme as hardliners claim, I’d be very very relieved.

  6. Fifty years down the line, when the history of India is written, September 6, 2008 would be a major landmark.

  7. Thanks for citing Idaho Samizdat.

    There is updated information as of Sunday, September 7th, includes a review of major mainstream media coverage in the U.S. of the NSG and India’s nuclear deal at this URL.

  8. Sanjeev,
    It would hardly be a surprise if the main reason for the US pushing the deal would be to get more business for American companies. There has not been a single new reactor built in the US in 30 years, so companies like GE *have* to look elsewhere. And India offers an excellent market.
    That being said, I think it’s a bit insecure to assume that what Perkins talks about in his book would happen to India. Perkins talks about 1960s and 70s Indonesia, Ecuador, Panama, etc – banana republics with weak economies that were easily manipulated by USA. India has historically been very independent in its foreign policy, and is among the five largest economies in the world (by PPP). While America will no doubt try to arm-twist India into getting its way in crucial UN votes, etc, I think India has a strong enough backbone (not to mention domestic opposition) to resist America’s “charms”.

  9. Am happy the waiver is through.

    US ‘energy’ giants are at a disadvantage anyway because we haven’t yet legislated some ‘liability waiver’ for them (necessary, post-Union Carbide in Bhopal). Besides, to invest in yindia, some expectations on returns must be there. With a power sector perennially in the red and bleeding T&D losses massively, there’s little comfort on the ROI front short of an Enron-style long term ‘pre-purchase at set prices contracts’ (which is now hot-potato item anyway that the barely-solvent states and their bleeding SEBs can ill-afford anymore).

    Bottomline, its not energy that’s it, despite the noises the netas on both sides loudly made. Its about alliance, about geo-political re-orientation. Wish the terms and the promises and the vision driving that re-alignment would become clearer, though. And mark you, its a decades-long horizon on the said re-alignment, given that both US parties are on board – its certainly something that will far outlast the Dubya administration.

    For now, on the commercial front, expect some big ticket defence deals to go the US way (perhaps the mammoth 126 jet MMRCA contract), apart from wider market access to US giants in the retail, insurance, banking and pensions sectors.

    Just speculating on my part onlee, would be interesting to see how things turn out.

    Have a nice day, all.

  10. Dear Others,

    Of course I am imagining the worst case scenario But going by the current intelligence of Indian Politicians and seeing how hard Sonia Gandhi’s Government lied to Indian People at every turn about this deal, I don’t expect it to turn out better than what I have described. Unless of course “Merchant of Death” becomes the PM 🙂

    I wouldn’t be surprise if US Businesses/Government were the driving force behind “Vote for Money” scandal too. They are the biggest beneficiary after all.

    Also, reading “Confessions of an Economic Hit man” certainly makes it clear that US Businesses and Government are nearly one and same for most purposes.

    Even though India is not a weak economy like Indonesia others, it is falling into same trap and the trap has been enlarged to entrap India.

    Do any of you really believe that the loans that India will take from US through Wordbank, IMG, USAID can ever be paid back by selling electricity?

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