Monday, February 20, 2006

Indo-US Nuclear: A Risky Venture ?

India is developing at an immense pace. As the Indian and the Chinese economies grow, they will share a larger portion of the global energy pie. Currently, both economies are heavly based on coal but petroleum and natural gas needs in India and China are increasing rapidly. Chinese companies have been very aggresive in getting oil contracts from Africa, Central Asia and Middle East. Due to later economic reforms, India is few years behind China in the economic development cycle and in terms of the internal demand for crude oil. This leaves India at a disadvantageous position in relation to China.

While India possess abundant coal, the quality is inferior and not at all eco friendly. Alternative nergy is a viable long term alternative but the costs associated with it are still very high. Nuclear Energy is the only modest option remaing for India. Indo US Nuclear deal is not only in betterment for India but also for United States and China too. Without such a deal, we may see $8-9/gallon gas prices by 2011-12. The less competitive the oil market is the better the world economies will funciton and less suseptible the world economies are from machinations of OPEC Oligarchs.

United States understands this fact very well and thus has offered India with a civilian Nuclear deal. France has also signed a similar deal with India and is willing to supply fuel (uranium) provided every new nuclear facility that India starts is put under IAEA safeguards. The United States deal is a uranium based deal too. The United States expects India to fourteen existing reactors under the safeguards of the IAEA. Few reactors will still remain under the military program and will not undergo IAEA inspection. The existing fast breed reactors and the ones that will be constructed in the future will not be put under the nuclear watchdog.

United States in the past had agreed to supply the Tarapur reactor with fuel, but later backed out of the deal. Yes, it is true that the United States is not entirely trustworthy, but then who is? Iran is India's good friend, but in the world of politics there are no friends forever. The Indo-Iranian gas pipeline via the violent jihad-ridden provinces of Pakistan is India's second option to address its growing energy needs. The Communists and the Left in India would prefer the second deal over the first one. All I want to ask them is - "What is the guarantee that pipeline won't get blown up by some fanatic or for that matter blocked on Pervez Musharraf's instructions inorder to threaten India economically?". Also, there is no guarantee that our loyal Iranian friends won't ditch us for some Chinese Mullah.

Clearly, the US backing out of the deal is a possibility. But energy is precious and is running out. India is in a quagmire and needs to choose atleast one path fast. I think that the Indo US deal is the safer path to choose.

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