On Hollande’s mind

What the French president might encounter in India

This is the English version of a piece that appeared in BBC Hindi today

When President Francoise Hollande arrives in New Delhi next week as the chief guest on India’s Republic Day celebrations, he will be taking a short, partial break from his two main preoccupations: how to reduce unemployment in France ahead of the 2017 presidential elections and how to ensure that the threat from home-grown Islamist terrorists is contained.

In addition, he will no doubt be concerned about the economic trajectory of the euro zone, the prospects of long-term instability in Syria and the Middle East and, ultimately, of the risks to France’s geopolitical standing in the twenty-first century.

The honour, symbolism and pageantry apart, where does India register in President Hollande’s agenda? The immediate, tangible prize is to bring the long-drawn negotiations over fighter aircraft and nuclear reactors to fruition, which might together be worth $30 billion or more. The devil, as usual, is in the detail, and an agreement might prove elusive until the last minute. These deals matter for Mr Hollande not only because it will help him stay on the right side of politically powerful business interests, but also because they could create thousands of skilled jobs.

Mr Hollande had pledged not to stand for re-election if he “failed on growth, failed on unemployment, failed on the recovery of the country”. So a boost in jobs, investment and growth is important to his own political prospects. Given that unemployment rose to from 9.7% to 10.1% during his term, disproportionately affecting younger people, it is small wonder that he declared an economic emergency earlier this month.

If these important defence and energy deals are what Mr Hollande hopes he can take back with him, he would do well to explore how India is tackling its own employment creation challenges.

In fact, France and India have common problems on this front, in terms of restrictive labour laws, choke-hold by trade unions and a skills gap. Indian businesses like TeamLease Services, Ma Foi Randstad and others have developed experience in creating employment in an environment where there are powerful regulatory and political-economic disincentives for direct hiring. (Disclosure: Manish Sabharwal, co-founder of TeamLease is a donor to my institution). If Mr Hollande were to spend some of his time meeting Mr Modi’s officials dealing with skills and employment generation, he might carry home some good ideas in addition to the good deals.

While France and India share some similarities in the internal security context, the nature of the threat is different: for France it comes from its own citizens disgruntled with its foreign policy; for India it emanates from across its borders. Therefore even if the Paris attacks and 26/11 appeared similar, how they materialised is different. Therefore, while India and France could discuss counter-terrorism cooperation and better share intelligence, there are limitations to the extent they could go.

Similarly, India’s role in assuaging French worries over the Eurozone crisis is limited.

In recent years, France has increased its commitment to the security of the Indian Ocean. By virtue of its possession of islands of La Reunion and Mayotte, and their accompanying vast Exclusive Economic Zones, France considers itself a stakeholder and power in the Indian Ocean. It also has bases in Djibouti and Abu Dhabi that support its military interventions in Africa, the Middle East and Afghanistan. In contrast, its capacity is limited east of the Malacca Straits.

Given that India’s own maritime footprint is significant in the Western Indian Ocean (including a diaspora in La Reunion) there is a degree of strategic contestation between the two powers in this part of the maritime space. On the other hand, shared interests in freedom of navigation indicate a scope for greater collaboration on the Eastern part of the ocean. Both Paris and New Delhi realise that this calls for closer dialogue between the strategic establishments of the two countries and regular exercises between their armed forces.

Indeed, a closer relationship with New Delhi is vital to France’s continued standing as an important global power in the twenty-first century. It was far sighted on behalf of the French to initiate a strategic partnership with India in 1998. From the Cold War era to recent times, New Delhi has had in France an independent-minded partner unhesitant to buck the Western consensus on defence, space and atomic energy issues. It is for the Modi government to build on that relationship and enlist France as a partner to extend India’s own geopolitical profile.

My op-ed in Mint: Don’t lose sleep over reprocessing

And anyway, the United States just confirmed that it won’t block ENR technology transfers to India

Image: Jayachandran/Mint (Copyright © 2009. Mint)
Image: Jayachandran/Mint (Copyright © 2009. Mint)

In today’s Mint, I argue that the anxiety over the G-8 statement on restricting transfers of enrichment and reprocessing (ENR) technologies is unwarranted.

It might be that the Obama administration’s prejudices make it less sensitive to its own need to strengthen the India-US relationship by building on common interests. On any number of issues— from balancing China, stabilizing Afghanistan-Pakistan, to engaging Iran and addressing climate change—the US cannot do without India’s cooperation. It will be impossible for the United Progressive Alliance government to take bold steps in any of these areas if the US is seen as insensitive to Indian interests or, worse, reneging on its commitments. [Mint]

This is echoed by Arundhati Ghose, a stalwart of the Indian foreign service, in a piece that also appeared in the same newspaper. The India-US nuclear agreement, she notes “was meant to remove the nuclear thorn in the side of Indo-US relations. Even if this issue is not on the agenda of secretary of state Clinton, the opportunity should not be missed to clarify issues rather than permit a potential irritant to fester.”

The good news is that when asked if “if America opposed transfer of ENR technology to India, US Secretary of State Hillary Clinton replied, “Well, clearly we don’t.”” The joint statement (linkthanks Ram Narayanan) at the end of her visit says “India and the United States will begin consultations on reprocessing arrangements and procedures, as provided in Article 6 (iii) of the 123 Agreement for Peaceful Nuclear Cooperation between India and the United States.”

Reprocessing arguments

The G-8 statement on non-proliferation does not take away the core benefits of the India-US nuclear deal

Don’t blame yourself if you have difficulty in navigating through the jargon, subtext and the writers’ agenda in the return this week of the India-US nuclear deal into the media limelight. But before you subscribe to any of the conclusions that reporter-commentators, opposition leaders and incumbent ministers want you to, take a step back and consider what the deal is about. (See A good deal, but bad politics, from August 2007)

The deal—which itself comprises of the bilateral agreements between India and the US; US domestic law in the form of the Hyde Act; and the multilateral “clean waiver” at the Nuclear Suppliers Group—allows India to import foreign reactors and nuclear fuel for generating electricity. These reactors and fuel supplies will be under an international inspection regime (called ‘safeguards’) under the International Atomic Energy Agency, which ensure that they are not used for producing weapons.

This means two things: first, provided the domestic regulatory environment is liberalised, it will be much easier for India to address the huge energy shortage by exploiting nuclear power. And second, it will free up domestic and foreign non-NSG sources of nuclear fuel for use in the weapons programme.

There is nothing in what the G-8 leaders said earlier this week that will change this. But wait, didn’t they, as Siddharth Varadarajan argues,—at the behest of the Obama administration—call for a ban on the transfer of enrichment & reprocessing (ENR) technology to India, even to safeguarded civilian facilities? Yes, but it doesn’t really matter.

It only means eight of the 45 countries of the NSG have agreed to implement a draft of a text that the NSG has not yet agreed to. The NSG is a cartel, not a treaty, and its agreements are non-binding on its members. The G-8 is a loose group, not even a cartel, less a treaty, and its agreements are non-binding on its members. France and Russia are aware that the United States disadvantaged itself as a nuclear supplier to India by hobbling itself with the Hyde Act. Are they likely to sign away a long-term competitive commercial advantage for the sake of a lofty principle? Unlikely—the prisoners’ dilemma is in India’s favour. But what if they do?

Well, it means that the fuel for civilian nuclear reactors will have to be sent back to reprocessing facilities abroad. While this might change the price of the fuel—and affect the competitiveness of the supplier of that fuel—it does not disturb the security of fuel supply.

Since India has its own indigenous reprocessing technology, the ‘ban’ on ENR exports to India, were it ever to materialise, does not affect the ability to produce fissile material for the nuclear arsenal. Even Mr Varadarajan admits that India is “technologically self-sufficient in reprocessing and enrichment technology” and its inclusion in the India-US nuclear deal was “matter of principle, positioning and ‘paisa’.” (Actually, the real problem with respect to reprocessing is not the G-8 or NSG rules, but rather, the Indian government’s lackadaisical attitude towards investing in new reprocessing facilities.)

So it turns out that even in the worst case—if the G-8 countries decide to overturn bilateral agreements, voluntarily give up their competitive advantages and prevent others from doing so—India’s energy security and nuclear programme will remain substantially unaffected.

Why the outcry then? Mr Varadarajan is right on two counts: the US government will do what it must to protect its interests, and the Indian government can’t afford to be complacent.

But unless you’ve been living in a cave you would have guessed by now that Barack Obama does not have the same view on India as his predecessor did. You will also know that Mr Obama intends to take the old arms control and non-proliferation route to nuclear disarmament. This means that the old alphabet soup of CTBT, FMCT and NPT is back on the table, and the G-8 decision is an early sign of that. Disagreements and differences of opinion are on the cards, but India is in a much better position to deal with these because of the nuclear deal, than it would have been without it.

The Congressional OK

A big deal passes muster

It was the big deal until the Paulson bailout upstaged it. But the US Congress has voted in favour of the India-US nuclear deal. Senators John McCain, Barack Obama and Joseph Biden all voted in favour.

As is the practice, they’ve sent it to President George W Bush for his assent. Technically he can veto it. But the chances of that happening are, ahem, slim.