Why Australia Should Sell Uranium To India – Lavina Lee

Why should Australia sell uranium to India? This has become a controversial issue Down Under. Dr Lavina Lee is a lecturer in politics and international relations at Macquarie University, Sydney. She has a combined law and commerce degree from the University of NSW, a Master of Arts with distinction from King’s College, University of London, and a doctorate in international relations from the University of Sydney. Lavina Lee is also the author of US Hegemony and Legitimacy: Norms, Power and Followership in the Wars in Iraq [Routledge, 2010]. Lavina Lee addressed The Sydney Institute on Wednesday 3 March arguing why Australia should change its uranium export policy.

WHY AUSTRALIA SHOULD SELL URANIUM TO INDIA

LAVINA LEE

Thank you Gerard and Anne for giving me the opportunity to address The Sydney Institute this evening. Tonight I am going to speak about what I believe to be a central issue holding back a deepening of the strategic and economic relationship between Australia and India – the decision by the Rudd Government in January 2008 to reverse the Howard Government’s decision to begin selling uranium to India. It is not my intention to speak on the issue of whether Australia itself should begin a nuclear power program.

Australia is a country with abundant uranium resources – according to the World Nuclear Association, in 2007 Australia had the world’s largest known deposits of low cost uranium at 23 per cent followed by Kazakhstan and Russia with 15 per cent and 10 per cent respectively. We have been exporting uranium for some time to both recognised NWS and NNWS under the NPT with our major buyers being the US (4000 tonnes), Japan (2,500 tonnes), South Korea (up to 1000 tonnes), Taiwan (500 tonnes) and more recently China (300 tonnes) from 2006. In the year 2008-09 around 10,000 tonnes of uranium oxide concentrate was exported with a value of around A$ 1 billion.

The Labor Party has long been guided in its uranium export policy by concerns about the proliferation of nuclear weapons technology. When in power it has taken an active role in international diplomacy over the development of the Comprehensive Test Ban Treaty, the South pacific Nuclear Free Zone Treaty (Treaty of Rarotonga 1986), the establishment of the Canberra Commission on the Elimination of Nuclear Weapons of 1996, initiating the creation of the International Commission on Nuclear Non-Proliferation and Disarmament co chaired by Australia and Japan, and the Inquiry into Nuclear Non-Proliferation and Disarmament. Whilst there has been much past disagreement over the amount of uranium mined in Australia, both the Liberal and Labor parties have been in agreement about the need to ensure that Australian uranium ore is only used for peaceful purposes.

Australia’s uranium export policy therefore includes the following conditions: that uranium “may only be exported for peaceful non-explosive purposes under [a] network of bilateral safeguards Agreements”, which provide for the “coverage of uranium exports by IAEA safeguards from the time they leave Australian ownership” and “continuation of coverage by IAEA safeguards for the full life of the material or until it is legitimately removed from safeguards”. Further, Australia will not export uranium to any country that is not a party to the NPT. Any customer that is a Non-Nuclear Weapons State must have also concluded a fullscope safeguards agreement with the IAEA including the signing of an additional protocol. Under these conditions the sale of uranium to India is precluded because it is not a member of the NPT.

Since the Rudd Government announced its decision to bar uranium sales to India two major events have taken place: firstly, the approval by the US Congress of a bilateral civilian nuclear cooperation agreement between the US and India in October 2008; and secondly, the issue of a waiver by the Nuclear Suppliers Group allowing trade in civilian technologies and materials by its members with India on 6 September 2008. It should be noted that the NSG is a consensus body, and that Australia supported this decision. As such, the NSG agreed effectively to recognise India’s status as a defacto nuclear weapons state.Despite Australia’s support for NSG waiver, in his visit to India in November 2009, Prime Minister Rudd reiterated government policy to bar uranium exports to that country. At the same he acknowledged that “India is a fundamentally important relationship for Australia…It is so strategically, it is so economically.” Mr Rudd noted that in past decades the relationship with India had been on-again, off-again.

What I am about to argue is that Australia’s stance on exports of uranium to India is now outdated, serves no real non-proliferation purpose, is counter-productive to our stated climate change mitigation aims, and stands in the way of a real recognition of India’s importance to Australia strategically and economically, and therefore should be reversed.

Firstly, I argue that the Labor Party’s policy on uranium sales to India is now out of step with outside events and serves no non-proliferation purpose. As a result of the two events I have already mentioned – the US-India nuclear cooperation agreement and the NSG waiver – India is now viewed as a defacto nuclear weapons state, despite not having joined the NPT. By refusing to sell uranium to India Australia now stands alone in pursuing an outdated strategy to bring India into the NPT.

The non-proliferation regime has long followed a policy of isolation in regards to states outside the NPT – India, Pakistan, and now North Korea. Since its first ‘peaceful nuclear explosion’ in 1974 India has been unable to access nuclear technology and materials through trade. The NSG itself was created at the instigation of the United States as a response to these tests to coordinate export controls on nuclear trade to prevent transfers of civilian nuclear technologies and material from being diverted for military uses.  India has never joined the NPT on the grounds that it is an inherently discriminatory agreement that does not compel nuclear weapons states to disarm, whilst requiring non-nuclear weapons states from seeking their own weapons capabilities. The NSG agreed to bar civilian trade with India and all other states non-party to the NPT on the grounds that non-parties should not be given the same assistance as those that have joined the treaty. That is, the non-proliferation regime sought to isolate those countries outside the NPT from nuclear trade to provide them with an incentive to join, and to reward those NNWS within the treaty for their nuclear abstinence.

Despite this strategy of isolation, during this period India developed a truly indigenous nuclear program – both civilian and military – including a fleet of advanced pressurised heavy water reactors as well as a reprocessing and enrichment capability. This has largely come about as a result of two main imperatives – a desire for greater energy security through nuclear power, as well as for military security as a defence against ‘nuclear coercion’ from its near neighbours, Pakistan and China, with whom it has had military conflicts in the past.

The US-India agreement and the NSG waiver represents the abandonment of a strategy of isolation against India and an acceptance of the fact that India will never sign the NPT if it first requires the destruction of its nuclear arsenal. India’s strategic insecurities preclude it from doing so, without the disarmament of its neighbours. The abandonment of this strategy by the NSG stems from the view that more can be achieved by bringing India into the wider non-proliferation regime by requiring it to abide by NSG export control and Missile Technology Control Regime guidelines, separate its civilian and military nuclear programmes and to place the former under International Atomic Energy Agency safeguards. By sticking to a policy based on an outdated state of affairs – despite supporting the NSG waiver – the Australian government cannot alone achieve any non-proliferation benefits. India is now free to trade in civilian nuclear technologies and materials with any other member of the NSG.

It has been argued by the arms control community that the NSG waiver rewards India for staying outside the NPT and developing a military program. They argue that the lesson that may be learned from the Indian case is that ultimately there are no consequences for the development of a nuclear weapons program which, once acquired, is treated as a fact that the international community has no choice but to accept. This may encourage other NNWS to withdraw from the treaty. I argue that the sale of uranium should not be viewed as rewarding India for staying out of the NPT. Rather, it should be seen as a reward for showing restraint in its nuclear policies and for its adherence to non-proliferation norms despite not being a member of the NPT. India can be regarded as a “responsible” nuclear power because it has never spread its home grown nuclear weapons technology to any other state, unlike China, a member of the NPT, and has been linked to proliferation to Pakistan; has maintained a voluntary moratorium on nuclear testing since 1998; has a declared a policy of “no first use”; and has a “minimum credible deterrent” policy in regard to the size of its nuclear arsenal. For these reasons India should not be put in the same deviant category as other non-NPT states such as North Korea and Pakistan. The NSG has also agreed to consult on the issue of the withdrawal of the waiver should India conduct a nuclear weapons test again. As a result, the Indian government would have a strong interest in abstaining from nuclear testing to avoid jeopardising access to international trade in civilian nuclear technologies and material, both of which are necessary to underpin its ambitious plans to expand nuclear power.

I would like to also briefly address the argument that the sale of uranium to India would indirectly allow it to reserve domestic sources of uranium for military uses. This is technically possible. Whilst India was subject to NSG controls prior to 2008, both the civilian and military programs were restricted by the limitations of its natural uranium ore reserves, which are small and of poor quality. India has now agreed to separate its civilian and military programs, but has not agreed to cap fissile material production. However, from the Australia’s point of view, the same objections would apply to our uranium sales to China. There is at this stage no internationally agreed fissile material cut-off treaty.

In my view, in assessing the likelihood of India now accelerating its military program and the size of its strategic arsenal, we should keep in mind its past policies of nuclear restraint. There has been no change to its policy of seeking a “minimum credible deterrent”, which is estimated to fall somewhere between 100-150 nuclear warheads at most. It does not seek parity with China which has about 400 nuclear warheads. It needs only to ensure that it has a sufficient number of nuclear warheads and adequate delivery systems to ensure a second strike capability. Economically, India is still behind China in terms of the size of its economy and cannot compete cannot compete in a nuclear arms race. The problems of poverty alleviation and economic growth are of far greater priority.

If there are no longer any non-proliferation benefits to be had by refusing to sell uranium to India, I then argue that Australia is unnecessarily missing out on a number of economic, climate change mitigation and strategic benefits that could arise from a reversal in policy.

Australia is unnecessarily missing out on economic opportunities that have arisen as a result of the NSG waiver. India has announced plans to exponentially expand the contribution of nuclear power to its energy mix. The Government of India aims to continue an 8-9 per cent growth target to bring greater numbers of its population out of poverty. In 2006 the Indian Planning Commission estimated that “[w]ith the population growing at 1.5 per cent per year, 9 per cent growth in GDP would double real per capita income in 10 years.” A significant proportion of India’s population still live in poverty, with around 28 per cent rural population and 26 per cent of urban population living below the poverty line. There is a strong connection between economic growth and energy security. The Indian Planning Commission has estimated that to sustain an 8 per cent growth rate up to 2031-2032 the country needs to increase electricity capacity by 5 times over the next 20 years.

In order to achieve this target the government plans a massive expansion of nuclear power. There are varying estimates on the size of this growth with one report stating that the Government plans to expand nuclear power capacity from 4,000 MW to 50,000 MW by 2040, whilst another report cites a statement by Srikumar Banerjee, head of the India’s Atomic Energy Commission as estimating that nuclear power generation will increase to 60,000 MW by 2035. India does not have sufficient indigenous sources of uranium to fuel this expansion, unless the ambitious fast breeder program is successful. The Department of Atomic Energy has estimated that indigenous uranium resources can sustain the production of 10,000 MW per year for 40 years passed through pressurised heavy water reactors. If the fast breeder program fails to materialise, the expansion of the nuclear power will require the import of a substantial amount of uranium.

The reality is that if Australia continues to refuse to sell uranium to India it will be able to meet these uranium requirements through trade with other countries. States such as France, Russia, and the US, have wasted no time to sign up deals to export nuclear reactors. On the uranium front, whilst Australia has the largest uranium deposits in the world, states such as Kazakhstan, Mongolia, and Russia have already stepped in to fill the breach, whilst Canada is keen to sign a nuclear cooperation agreement with India of its own. As mentioned at the beginning of this address, Kazakhstan has the second largest low cost reserves of uranium ore after Australia.

Apart from the economic opportunities forgone, uranium sales will also support the Australian government’s climate change objectives. It is well known that economic growth of the two most populous nations in the world, China and India, into the next century will contribute greatly to a rise in greenhouse gas emissions unless there are significant breakthroughs in renewable and other clean technologies. Nuclear power is of course almost carbon neutral emitting between 9-100 g/kwh of carbon dioxide as compared to 800-860 g/kWh from advance coal. India cannot avoid using coal to fuel economic growth into the future, with coal being its most abundant natural resource. It has been estimated that India’s consumption of world’s coal will rise from 6 per cent to 45 per cent by the middle of the century.

Nuclear power can however reduce the climate change impact of this growth by reducing the amount of coal used to provide electricity. In his testimony to the US Senate in 2006, David Victor estimated that the displacement of 20,000 MWe produced via coal-fired power stations would abate 145 million tonnes of CO2 per year, representing “the entire commitment of the 25 EU nations to reducing emissions under the Kyoto Protocol” and “exceed the total carbon savings from 100 larges developing country projects under the Kyoto Protocol’s Clean Development Mechanism.” If India manages to expand its nuclear power generation capacity by 40,000 MW this would therefore abate around 390 million tonnes of CO2 per year. To put this in context, the UN estimated that Australia’s CO2 emissions were 390 million tonnes in 2006.

The issue of uranium sales has also become the central road-block to a deepening of the strategic relationship between Australia and India. Australia is keen to build closer defence ties with New Delhi, a trend which began with the previous Howard Government with initiatives including  participation by Australia (along with Japan and Singapore) in the Malabar naval exercises conducted by the US and Indian navies in the Bay of Bengal between 4-9 September 2007. Similarly, on his visit to India last year in October 2009, Foreign Minister Stephen Smith put in a request with his counterpart SM Krishna to again participate in the Malabar exercises and also invited India to participate in multilateral Australian Defence Force-hosted exercises Kakadu and Pitch Black. To my knowledge, India has not yet acceded to this request.

Both Australia and India share security interests in maintaining maritime security in the Indian Ocean and share apprehension about the implications of a rising China – Australia’s recent Defence White Paper makes clear that China’s rising power, its military modernisation and projection capabilities have an unknown strategic purpose. It is in Australia and India’s interests to expand our naval cooperation in the Indian Ocean to provide a check on possible Chinese ambitions there. Initiatives such as the November 2009 “India-Australia Joint Declaration on Security Cooperation”, which includes defence cooperation on issues such as terrorism, maritime and aviation security, suggest that both countries recognise their shared strategic interests. However, implementation of this intention has not yet been fleshed out. It is likely that whilst the uranium issue remains outstanding, genuine strategic cooperation will not be forthcoming. The Indian Government will likely come up against pressure from its own strategic elites to slow progress on this front until the matter of uranium sales is resolved. From an Indian perspective, the refusal to sell uranium demonstrates a lack of trust in India’s own strategic intentions within the region.

Endnotes

“Govt reverses uranium deal with India”, ABC News, 15 January 2008.

World Nuclear Association, “Australia’s uranium”, Jan 2010, http://www.world-nuclear.org/info/inf48.html

“Rudd Won’t Rethink Uranium Sales to India”, 12 November 2009, http://www.sbs.com.au/news/article/1130632/Rudd-won-t-rethink-uranium-sales-to-India

“India says no private sector in nuclear power industry’, Thaindian news, 19 January 2009, http://www.thaindian.com/newsportal/uncategorized/india-says-no-private-sector-in-nuclear-power-industry_100144374.html

“If I see a smile on a face, I feel a prayer is being answered”, The Times of India, 5 December 2009.

Manpreet Sethi, “Nuclear Energy for India’s Energy Security”, in Arvind Gupta (ed.), India in a Changing Global Nuclear Order, New Delhi: Academic Foundation 2009 p. 44.

David G. Victor, “The India Nuclear Deal: Implications for Climate Change”, Testimony before the U.S. Senate Committee on Energy and Natural Resources, 18 July 2006 at http://iis-db.stanford.edu/pubs/21218/July_18_Testimony.pdf

United Nations Statistics Division, “Environmental Indicators – Greenhouse Gas Emissions”, August 2009 at http://unstats.un.org/unsd/environment/air_co2_emissions.htm

Amanda Hodge, “Stephen Smith Aims for India War Game”, The Australian, 15 October 2009.