American Enterprise Institute

May 11, 2006

[Edited transcript from audio tapes]

9:45 a.m.	Registration and Breakfast
10:00		Panel I: The Nuclear Deal and National Security
	Speakers:	Dan Blumenthal, AEI
		Selig Harrison, Center for International Policy
		Henry Sokolski, Nonproliferation Policy Education Center
	Moderator:	Danielle Pletka, AEI
Noon	Keynote Remarks:	Philip Zelikow, U.S. Department of State
1:30 p.m.		Panel II: The Prospects for Strategic Partnership
	Speakers:	Stephen J. Blank, Strategic Studies Institute
		Tom Donnelly, AEI
		Danielle Pletka, AEI
	Moderator:	Dan Blumenthal, AEI
3:30	Adjournment

Proceedings:

Danielle Pletka:  Good morning everybody.  You can see us all negotiating up here.  Thank you very much for coming.  I appreciate your waiting.  I’m Danielle Pletka.  I’m the vice president for Foreign and Defense Policy Studies.  We have an interesting agenda before us today and a very topical event talking about the U.S.-India relationship and the U.S.-India nuclear agreement. 

To start today, we have a distinguished panel, not just from AEI but also friends.  Let me start with Selig Harrison.  Selig Harrison is the director of the Asia Program at the Center for International Policy and a senior scholar at the Woodrow Wilson International Center for Scholars.  He is an eminence, I will not say eminence please, although, perhaps, actually eminence is right.  An on Asia and has written widely on issues relating in particular to India and to nuclear questions.  He used to be a journalist.  So not only is he an expert, he is actually an interesting and capable speaker as well.  So I’m happy that he is going to join us here today. 

Henry Sokolski is an old friend.  He is the executive director of the Non-proliferation Policy Education Center, which is a Washington-based nonprofit organization.  He is also an adjunct professor at the Institute of World Politics in Washington.  He has served in the U.S. government as well and he has been on the star circuit testifying, speaking, writing about this deal and I’m looking forward to hearing the latest from him.  Dan Blumenthal joined AEI in November of 2004.  He is a resident fellow in Asian Studies.  He was previously a senior director for China, Taiwan, and Mongolia in the Office of the Secretary of Defense.  He has done a great deal of writing on India issues since he joined us and we are hoping to do even more in the future. 

Without further ado, I’m going to turn to our speakers.  What we will do is we will go down the line, everybody will speak and then we will turn to the audience for questions after that.  Mr. Harrison.

Selig Harrison:  Thanks very much, Dan.  Though many arguments are being made now as this debate progresses on the India-U.S. agreement, but I think one in particular has had the most impact in the Congress.  I refer to the argument that the agreement will stimulate an India-Pakistan Nuclear Arms Race and an India-China Nuclear Arms Race by enabling India to have a bigger a nuclear arsenal than it could otherwise have.  I’m going to focus on that issue today, and then I’ll deal briefly with another important argument that the agreement will complicate the Iran nation. 

But first a word about the agreement itself; the Administration is emphasizing the strategic importance of the agreement as a hedge against China and the impact of the agreement on U.S. national security is, of course, the theme of this meeting today.  There is a case for the agreement in strategic terms because India cannot be a hedge against China unless it is strong and stable, and it cannot be stable unless it can keep pace with its burgeoning energy needs as the population soars past one billion.  That will require much more nuclear power in its energy mix. 

Much of rural India is mired in poverty and that is clearly leading to instability.  The Financial Times had a wonderful piece, a fascinating piece on April 26 by commending them and describing growing Maoist insurgency in impoverished areas where there is a lack of electricity and economic development taking place.  There are as many as 20,000 organized Maoist fighters in local insurgent units.  They are in 13 out of the 28 states and in roughly one out of four of the administrative districts in India.  In some of these districts, there are parallel Maoist local administrations.  India has made remarkable economic progress, but there is trouble ahead unless it is able to electrify the countryside and give help to the hundreds of millions of its people who still live below the poverty line. 

This agreement, in short, is about energy, poverty and stability.  It has nothing to do with the size of India’s nuclear weapons arsenal.  Of course, some critics of the agreement thought it would be nice if we could use civilian nuclear cooperation as leverage to cap or rollback India’s arsenal, but that was very naive in my view and reflected a lack of understanding of the limits of American power in the real world we live in. 

It was 32 years after India’s first successful test and eight years after India became a full-fledged nuclear weapon state, so it is a little late for capping or rolling back.  But the Bush administration did want to be sure that the agreement did not lead to an increase in the size of India’s arsenal.  It bargains hard, and they insisted on tough terms for civilian nuclear cooperation that will guard against the military use of any of the reactors that we assist. 

I was surprised when India agreed at the last minute to put all of its existing and projected civilian reactors under in perpetuity safeguards.  That is something China does not have to do under its nuclear agreement with the U.S.  China can buy a reactor from the U.S. for civilian use and shift it to military use whenever it chooses.  The critics say that the agreement will free up domestic uranium for the weapons program by enabling the import of foreign uranium for civilian reactors.  But the domestic uranium would have been available for the weapons program anyway.  They say that the breeder reactors would not be under safeguards and that will add to the arsenal.  But the breeders would have been available for military use, anyway.  That is why the Washington Post said, “The prospect of a potentially large plutonium program outside the scope of multilateral inspections is not a setback relative to the status quo.” 

The India nuclear weapons program has never been inhibited by a lack of uranium fuel and it will not be if the deal with the U.S. falls through.  The Indian Department of Atomic Energy says India has 78,000 tons of uranium ore and the United States agrees that it has at least 50,000 tons.  They have the PHWR reactors needed to convert the ore to fuel and they are improving the efficiency of their uranium mines, which means there will not be a shortage of ore for the reactors.  It is true, of course, that they do not have enough ore or enough of the conversion capability to sustain an open-ended civilian nuclear electricity program over a period of decades.  That is precisely why they want U.S. cooperation. 

I think what the critics are really saying is that without the agreement, India would have to choose between allocating its uranium for military purposes or for civilian purposes and we spare them that choice.  But it is clear that if India did have to make the choice between civilian and military priorities, it would opt for security.  In any case as it happens, India is not seeking a large nuclear deterrent force.  Secretary of State Rice told Congress that they have a “very restrained nuclear program.”  Most estimates say it is between 60 and 100 warheads.  All of this is well understood by Pakistan and China despite some of the rhetoric coming out of Islamabad and Beijing.  So if there is a nuclear arms race at some point between India and Pakistan, it will result from other factors not from the U.S. nuclear agreement with India.  

Apart for the nuclear arms race, some critics say that the agreement will provoke China to sell Pakistan more civilian plutonium reactors that could be converted to military use.  It is true that Pakistan has asked China to sell it two more civilian reactors in addition to the Chashma reactor, which is already producing electricity, the KANUPP reactor now under construction, and the projected Khushab reactor.  China told Musharaff on his visit to Beijing on February 23rd that this would require an exception from the Nuclear Suppliers Group, which China joined two years ago.  And that would be hard for the NSG to justify.  I hope that the United States is able to get an exception from the NSG for India if Congress amends the 1978 Atomic Energy Act.  Britain, France, Russia, Germany and Secretary General El Baradei of the IAEA all favored that. 

But Pakistan is another matter.  India has observed article I of the NPT which bans the transfer of nuclear technology even though it is not a signatory to the NPT.  It has effective export controls and civilian control over nuclear weapons.  Pakistan has sloppy export controls and many of the ruling generals were in cahoots with AQ Khan in running his global nuclear weapon Wal-Mart. 

Now turning to Iran, why is Iran attempting to develop a nuclear weapons option?   First and foremost, because it feels threatened.  It is encircled by U.S. bases in the Gulf and Central Asia and faces a U.S. regime change policy that includes a threat of preemptive military action.  Israel has the Dimona reactor and a recessed nuclear deterrent.  Iran agreed to suspend its uranium enrichment when negotiations began in November 2004 only because the EU-3 agreed to discuss its security concerns as part of a settlement.  Language of the joint declaration that launched the negotiations in November 2004 was unambiguous. 

I would like to mention this today because I think getting this clear is really necessary to answer the argument about Iran and India.  Here is what it said:  A mutually acceptable agreement would not only provide objective guarantees that Iran’s nuclear program is exclusively for peaceful purposes but would “equally provide firm commitments on security issues.”  Working groups on political and security issues were to report back in three months.  But the U.S. has proved unwilling to cooperate with the EU in formulating concessions to Tehran relating to its security concerns.  Of course, there are other factors. 

Most important, the idea of having nuclear weapons is politically popular in Iran.  It is appealing to Persians to have a nuclear option if their Arab neighbors do not.  It is a symbol of sovereignty if you are being told by the world’s leading power that you dare not do it.  Iran has an Islamic radical as president now as you know.  He is being strengthened by the threat of sanctions, but it was an attractive issue even in the days of the Shah.  In any case, my point is that whether Iran will develop a nuclear option has nothing to do with the U.S.-India Nuclear Cooperation Agreement.  India and Iran need each other economically and I do not believe that would be affected by the U.S.-India agreement. 

Now, if we had more time, I could discuss the arguments that are often made about conditioning this agreement on nuclear arms control measures by India.  I think it is important to remember that India made an extraordinary offer to forego nuclear weapons on June 9th, 1988 in exchange for a time-bound, ong-term commitment by the existing nuclear powers to move toward nuclear arms reductions.  And it was a remarkable offer because it would have committed the nuclear haves — would have given the nuclear haves 22 years to face off their nuclear arsenals while India and the other non-nuclear states would have been committed under inspection not to cross the nuclear threshold.  So it was an offer that was pragmatic, it was ignored, and so we ended up with a nuclear ending. 

Now the burden for nuclear arms control is on the United States and Russia; approximately 6000 and 5000 operational strategic warheads, respectively.  The burden is not on India with 60 to 100 warheads.  Of course, as we all know, the United States is heading in the other direction upgrading its arsenal.  So it would be a nonstarter for the U.S. to attempt to attach arms control conditions to this agreement. 

In conclusion, I would like to emphasize that a strong, stable India is critical to U.S. national security.  A strategic partnership with India has already begun to develop in recent years as a natural consequence of shared democratic values, compatible market economies, growing technological interdependence, and a congruence of geopolitical interests.  Extending this partnership, the cooperation and civilian technology has now become urgent.  Against the background of China’s rise, including the projected expansion of China’s naval reach in the South China Sea and the Indian Ocean, a strong stable India will advance the traditional U.S. objective of an Asian balance of power in which no one nation is able to exercise overwhelming dominance. 

Since both the U.S. and India are seeking constructive relations with China, I think it is important to note that neither Washington nor New Delhi wants their new partnership to become an anti-Beijing military or security alliance in a traditional sense.  At the same time, as a series of joint naval exercises have shown, the U.S. and Indian navies are positioned for growing cooperation from the Persian Gulf to the Straits of Malacca. 

In the event of disruptions in the movement of critical energy supplies through Asian sea lanes resulting from wars or piracy, this cooperation will enhance the ability of the U.S. to respond effectively.  Apart from such direct military cooperation, the U.S. and India have a common strategic stake in combating Islamic extremism in Afghanistan, the Persian Gulf, the Middle East and Central Asia. 

Two previous administrations have… you might say inched toward or attempted to move toward a strategic partnership with India while keeping in quarantine any dealings related to civilian nuclear technology or dual-use technology with possible applications to Indian nuclear or missile programs.  This approach has failed and it will still fail, discontinued because India is a subcontinental giant with a middle class larger than the combined population of France, Germany, and Britain.  The middle class alone, it is endowed with a wealth of indigenous talent in science and technology and feels confident that will achieve major power status with or without external help. 

And now really in conclusion; for India, keeping pace with its energy needs is its number one national challenge.  It’s the number one national challenge.  And therefore, U.S.’ help in meeting… is a litmus test for India as to whether the United States is really sincere in talking about strategic partnership. 

The alternative to such a partnership could be the emergence over time of a Gaullist India; a freewheeling India that could play an unpredictable role in Asia, the Middle East, and the Persian Gulf with uncertain consequences for U.S. security in the decades ahead.  Thank you very much.

Danielle Pletka:  Thank you for that interesting perspective.  Henry, if we could turn to you now.

Henry Sokolski:  I spoke here once before on the India deal.  At that time, I said it would not be the deal I would strike, was not that enthusiastic about it, but the deal is done much like the agreed framework that Clinton announced.  There are many opponents to that but they did not realize the power of President Singh, the power of foreign policy in reaching the agreement.  At that time, I said it is very important to get this done right as best we can for that reason since it is going to be an agreement that will be implemented. 

Now, in this regard, we should keep in mind however, there have been other nuclear cooperative agreements like that under the agreed framework with North Korea, like that with China.  These things took many years to implement.  In one case, they clearly failed.  In the case of China, I guess, does anybody here know how many reactors we sold to China since 1998?  It is a round number - it is zero.  This may change but it is not in prospect because there is no financing for American reactors and there is no liability coverage for reactors in America and China, and we will come back to that because there is similar situation in the case of India. 

This suggests to me that there is some time to get it right.  It may not be in any rush to get it wrong and some of the conditions we will talk about later in this presentation are things that everyone will be seized [??] with on Capitol Hill and should be.  Before I get into those conditions, I would like to just say I guess four points with regard to those critics; I guess that is me. 

First, I think you do have it right, Selig.  The uranium shortage is acute enough that it is forcing India to have to choose.  I think the figures you gave are true but misleading.  Fifty to seventy-eight thousand tons of uranium in reserve is absolutely right if you are willing to look at reserves there in the ground.  If you are interested in what India produces in a way of uranium a year, it is a much different number.  It is about 300 tons.  Why is that an important number?  Well, what do they consume a year?  Four hundred and fifty tons.  They are in a deficit and that is the rub. 

How have they have been managing to run the nuclear power plants?  Well, they have a stock pile of uranium that is running out.  This is the reason why people like Subramanian and other officials who have spoke in the BBC have said in about a year, by the end of certainly 2007, perhaps sooner, we are going to have to ramp down even further the operations of our civilian nuclear power plants.  Meanwhile, in February of 2007, there is about to be a decision in India on whether to make a new military production reactor. 

One of the reasons they are waiting to make that decision is they need uranium to run it, and they are hoping by then the seas will part with regard to this deal, an exception will be made, and they can get foreign ore to run enough civilian reactors to power up a new production reactor and the construction would then proceed.  I could go into the enrichment program, which right now only uses about 10 tons.  Certainly, freeing up or by bringing in foreign ore for some other safeguard reactors would then allow that facility to operate in much higher rates, but I do not think it is useful to take my word for this. 

The National Command Authority of Pakistan rarely does rhetorical stunts but I’m not an expert.  To my knowledge, they rarely come out and make public statements.  They are flummoxed at a minimum, if not outright panic.  They are talking about getting their own enrichment program up to keep pace and they do not think that this has no military implications so there is a problem of perception there right off the bat, right or wrong. 

I guess the third point is electricity is a great thing but trying to supply it in the short run with nuclear power is a little bit like trying to supply electricity to American masses by perfecting fusion.  It is extremely expensive.   We do not have the grid to reach out to the very poorest people in the first place, particularly in the far-reaching rural areas.  And that is the reason why the money initially that would be spent on nuclear really ought to be spent on other things which are doing pretty well in reaching out to the rural areas. 

That is not to say that nuclear power does not have a role in the future whether you should maintain nuclear power.  It is just the idea that you solve that problem by ramping up nuclear electricity in the short run is a little misguided.  As I mentioned before, the prospect that we could help with reactors in particular is quite fanciful since the nuclear vendors in the United States will not sell unless there is liability pool and insurance, and that is not available and will not be for quite a few years. 

Now, with regard to what we can expect from India with regard to Iran and China, I will leave that to Dan Blumenthal, but I think this idea of a Gaullist state… by the way, France is an ally, I think I take [indiscernible]; I kind of like the French.  Well, a little and they are sort of anomaly allies.  I think the Indians, to treat them fairly, have a rather independent view.  They are not yet toadies [sounds like] in the United States.  I think they rather like the idea of what you dismissed as a bad thing, which is a Gaullist India.  They would like to protect themselves and choose the way to do it.  And that is the way it is going to work, sir.  I do not think it — and we need to be aware of that, particularly, if we expect to be friends with them in a bigger way, so I think that has already occurred. 

Now, let me just go through briefly what is that issue on Capitol Hill because there are three or four things that I suspect are going to be debated.  No matter how strongly people feel about making friends with India, there are certain other issues.  By the way, I think making friends with Indians is a great idea.  I did not know that we were enemies but I suppose this is the way the things rhetorically are shaking out. 

First, one of the issues which has nothing to do with what India demanded but something the White House would like is to take away the requirement of Congress, to have to vote up this agreement with majorities in both Houses.  This is what is called a nonconforming agreement.  And the reason why is India is a little sporty.  It is tested [??], it is not member of the NPT, it does not have all its facilities under the international inspections, and under the rules of U.S. Atomic Energy Act, it is a nonconforming agreement.  In those cases, and we have not had one until now, you have to have both Houses vote by majority, so it is a good deal and that means you have to actually see the deal.  We do not have copies of the deal. 

The negotiations of those deals have begun but they are not finished.  When drafts of that deal were asked for by the Hill, essentially Congress was told “Drop dead.  We are going to use executive privilege to prevent you from seeing any of them.”  And the reason why is not hard to figure.  There are three boilerplate requirements that are in the deal now that are causing the Indians a lot of gas pains, no pun intended.  And the problem is this: when India set off a nuclear test in 1974, it said, “You know, you broke the deal in supplying us fuel for the reactors, you sold us the [indiscernible] work because there was no clause in there that said if we test, you suspend supply.”  So we fixed that.  For every subsequent nuclear cooperative agreement, we put the language in.  If you test, expect suspension of supply. 

Also by the way, if you reprocess, you have got to get permission from us if it is our fuel.  Also if you break this, we expect you to send all the bits and pieces we gave you in a package and send it back to the U.S.  They do not like those clauses - surprise, surprise.  They want them out.  They want them reformulated. 

The Hill has a different view I suspect, particularly on the testing manner.  Then there is the safeguards agreement.  I just came from a meeting with a foreign government.  I’ll protect the name of that government.  It is a very important ally.  It is somewhere in the Middle East.  And this country said it is very important that you get standard safeguards on what few reactors are going to be safeguarded or the non-proliferation value with this is zero or negative.  Well, I mean I’m not sure that it is all that positive, but if we do not get them, it is pretty clearly negative. 

The Indians do not want to have Information Circular 66 standard safeguards.  They want country specific safeguards.  They want I say, “Well, we only want it safeguarded if it has got foreign fuel, and when foreign fuel is not there, then it is not safeguard.”  They want also those other exceptions.  The IAEA does not want those exceptions and then there is a question of who is going to pay for these safeguards.  The Indians?  I do not think so.  The IAEA?  No way.  The United States?  I have not heard about that. 

One of the other things that Hill is wondering about is when will they get a chance to see the safeguards agreement?  Will it ever get completed?  Then there is finally the matter of the NSG.  This is the Nuclear Suppliers Group.  Should the exception come before or after the Congress votes on this package, which is a legislative package, which more or less if you vote for, you more or less say, we do not want to see anything after we vote for this.  If we do, unless we have super majorities to override the President, we have more or less already said whatever you do is fine.  We do not want to see it.  Congress, and the case of a few members, actually thinks they want the Nuclear Suppliers Group to do the exception first.  If that is the case, it is very tough. 

Now, I will not even get into the fissile [sounds like] matter because I assume in give and take, we can talk about that in Q and A, but I’ll close just with this basic point.  I think right now the administration is a bit — how do I say it, panicked?  They think that getting their package through in June is a test of whether or not the presidency of Mr. Bush is strong. 

I think that is a total misreading in his presidency.  I think it is insulting.  The reason why this is the key issue is do not focus on India.  Outside of the Beltway, I’m afraid to say it, except in India, nobody is focused on the Indian matter.  So Mr. Bush’s presidency will not rise and fall on this. 

Similarly, some people say, “Well, we have to do this deal in June because we are running out of time, and in November one of the Houses might change.”  Well, maybe they will, maybe they would not; nobody knows.  But more important, there are probably more Democrats in favor of this deal than are Republicans, so I do not get it.  I think that also is a phony argument. 

Then there is this argument on U.S.-Indian relations, which I think Selig, you are right and I agree on that.  Right now, the Indians tell us how to fill out our tax forms so they are in control of the U.S. Treasury as far as I am concerned.  The idea there are countries are somehow going to cut us under because of slowing this thing down and getting all these things tied up directly strikes me as nutty. 

Finally, there is the argument, that “Oh, well, but the Congress party might fall.”  Well, wait a minute, the reason we are doing this if I heard this correctly was their democracy, so why worry that the current party might fall?  Maybe we should think about this deal and these terms.  Is it good enough for the opposition to the current coalition because they are going eventually to come into power?  It is a democracy and if it is not good enough for them, maybe it should not be considered good enough yet. 

I think in short, we need to slow down and get this right.  We should be in no rush to get it wrong.  There is, frankly, too much at stake.  I will not get into it but the fact of the matter is this thing does constitute a non-proliferation headache if it is done incorrectly.  And it will knock down a lot of the rules on the Hill, which will be used for subsequent agreements with Russia, and dare I say the word, Pakistan.  On that note, I’ll hand it over to you.

Danielle Pletka:  Thank you, Henry.  I think the reason they want to get this done is because the Secretary of State, without discussing this with Congress, promised the Indians that it would be done by the end of June, which is a lesson to everybody not to make promises that your Congress is not interested in keeping.

Male Voice [??]:  [Indiscernible].

Danielle Pletka:  Yes.  Well, mainly.  Well, it is a bad idea with foreign policy.  Dan, thank you.

Dan Blumenthal:  On that note, that is very good note for me to start because the way I came out, after discussions with Henry and others, I kind of think about the U.S.-India deal or strategic partnership in some sort of framework, and the framework that we thought about was the U.S.-China opening, the U.S.-China deal from 1972 to 1979.  And the sort of provocative question I guess, or some people find it provocative, the question I asked is will India be a better strategic partner than China? 

And I can sort of say the short answer to that is, yes, it will, but that is definitely not the whole answer.  Certainly, when you look at it, when you look at the U.S.-India deal from a diplomatic transaction standpoint, it very much recalls the kinds of things we did with China if you are just looking at in terms of what are we getting, what are they getting versus some sort of longer-term strategic view. 

As with China, much of it was done secretly.  Commitments were made privately that were not expressed publicly and the administration paid for that in terms of the Taiwan issue in terms of legislation passed after the U.S.- China deal was done to basically undo some of what the private insurances were made on the Taiwan issue.  There were people in the 1970s, even at the time Undersecretary of Defense William Perry was saying that “Slow down with this, certainly on the military and security side of cooperation with China because we just have no idea whether it is right or in our interest to give high technology, advanced weaponry, advanced technology to a country that may not have our interest in mind.” 

What happened with the U.S.-China deal, and I will not rehearse the entire history of it obviously, but we gave up quite a bit upfront.  And a momentum started to build.  A technology is big and opened up to a point where in the 1980, Secretary of State Schultz said, “Why is it that we are in a relationship with China that is supposed to be a partner, that is supposed to share interest, Soviet Union, other interests as well, where the relationship works like this, they keep defining obstacles that we have to overcome in order to have a relationship that we are both supposed to want; whether it is Taiwan, whether it is technology transfer, whatever it is, you name it.” 

So, a momentum builds at these things that begin to take over once you change bureaucracies, once you change laws and it becomes very difficult to control.  Now, there were certain people predicting that China would grow into a great power that would rise as a challenge to us, but they basically went unheeded, and it is not obvious if you look at.  It kind of actually is not obvious to me why it is that if we both, U.S. and China, shared common interest, why was that the United States had to give so much upfront on issues of great importance to us, like I said, Taiwan technology transfer? 

And on the technology transfer issue, what we found with the China was that a lot of that technology was ending up in places that we did not like.  And that was because, again, China defined its interest very separately and very differently from our own.  We had certain common interest but China was going to add/take that technology and transfer to its own friends and allies.  So I think there are lessons here.  I do not think that India is going to — I can say pretty confidently that India is not going to merge as a competitor, as a strategic competitor, to the United States. 

But again, there is a lot of uncertainty in terms of India’s strategic direction.  We already see a number of things that we are concerned about, Iran and Burma in particular.  But yet, we are moving forward and essentially taking the most difficult part of the relationship, kind of shoot that off first. 

And again, looking at it from a diplomatic transaction standpoint, we give a lot on our own non-proliferation rules and laws, and ask other countries to do the same where it is not clear to me what we did get in return.  There are a lot of things obviously that we want.  You look at the Asia Pacific region and one of our greatest challenges right now, today, is the Chinese military modernization.  We are facing today the fact that it is much more difficult for us to gain access into the Asia Pacific region because of Chinese naval modernization, Chinese ballistic missile modernization.  We are getting to a point where the cause, the ability of the Chinese to punish U.S. forces for trying to access either the mainland of Asia or Southeast Asia has risen quite a bit. 

And we are also looking at a situation where China is moving into South Asia and in the Indian Ocean in ways that appear to be trying to develop a sort of alternative superstructure of energy security that also challenge us quite a bit.  It challenges India quite a bit, too.  But again, we did not ask for or gain any concrete commitments on cooperation with India with respect to our concerns vis-a-vis China.  So it is not clear to me that that particular relationship will develop.  India has great reasons to play the United States and China off with each other, at least for the time being. 

So in terms of just to appear diplomatic transaction, I do not really see, you know, I see some similarities with the China deal.  And again, we do not want to get into a situation where over the long term, the U.S.-India’s supposed strategic partnership is one where we are constantly having to overcome obstacles that the Indians put up in order to say that we want a relationship but that does not seem to me to make any sense, and that is something you want to develop early on in a relationship, say, if we have areas where we want to cooperate, let’s cooperate, but we are not going to do this by you saying, with any countries, you are saying, “We are only going to cooperate if you do X, Y, and Z first,” and then we get nothing in return. 

I think if you take a broader view though, you see that what does make sense is it should not really be viewed as a diplomatic transaction.  It should be viewed as India, like China, is emerging as a great power and United States has to recognize that fact, and we do have a common bind of shared values so I think it is not going to mimic the U.S.-China relationship in that respect, but we want to do what we can as the great power to try to shape and influence the rise of India as best as we can, to the extent that we can, I mean we probably have limited ability to do so.  And if you take it from that perspective, then you can see why forming a strategic partnership makes more sense. 

But again, that does not lead you logically to say, “The first thing we are going to do is cooperate on the nuclear deal because the Indians tell us that is the only way we are going to be strategic partners.”  In my view, as Secretary Rice says, “It is going to help India become a great power,” then, there is still a very, very big power gap between the United States and India.  India is still a relatively poor country.  It has a lot of things that it needs to do, and perhaps, I think, we can definitely help them with in terms of its economic growth, poverty, and electricity some of which Henry mentioned, again, and not obviously translating into what makes the most sense as nuclear power. 

But if we look at it from the perspective of over the long term, we have great strategic reasons why we want to shape, influence India in the right direction then certain things do make sense.  For example, I think as Selig mentioned, naval cooperation which has improved but pushing harder in that area, pushing harder in terms of what we can do to safeguard sea lanes together along the great expanse from the Persian Gulf back to the Southeast Asia is very important.  If we can get India to sort of join in the form of defense architecture that I believe is forming in Asia-Pacific region around U.S. and Japan but with other nations like Singapore and Australia, again a great gain for us but it is not something that I have seen being pushed incredibly hard.  If we are really thinking about India as counter weight to China, there are certain things we can ask for today. 

There are certain things I would like to see on the table right now discussed.  Access points for military from India if we need them so that we have another way to get on to the Asian land mass in case of a crisis with China is another example.  Pushing India and the great aspiration, of course, is that Japan and India form a sort of the great kind of book ends [sounds like] in Asia that would form sort of a new defense architecture.  But again, I have not seen too much of that sort of strategic concept being forwarded either. 

So I guess I would conclude by saying that the short answer to the question of will India be a strategic partner is it will be; it can be.  I do not see the merging as a strategic competitor or strategic challenge.  But if that is what we are really trying to do, I do not really see how the way we went about it is furthering that cause.  I do not see how it is, the fact that we have not asked for things that are important to us today, that does not make much sense to me at all.  And again, you want to get out of the situation where the Indians are defining for us what a relationship means. 

And also, if you want to be very clear and right about the fact that you are not going to get India to back off a very tight relationship with Iran, and so we have to be very careful again about the kinds of technologies you pass on to India.  The Indian and Iranian navies still cooperate; they still do exercises together.  And so again, you want to be very, very careful about what you send over because India is an independent, free-minded country and it is going to continue to find its interest independently and the fact is that you have to keep that very much in mind before you start to open technology spigots and certainly when it comes to advance defense technologies. 

So I’ll stop there because I think we have covered a lot of ground for you to start asking questions about.  Thanks.

Danielle Pletka:  I guess I would like to pick some of the topics that we are going to talk about by just adding in a few things that are of concern to me.  One of the things that we have been talking about here today is the deal as if it is a static being.  That is probably not the right way to come at it and I want to just throw out a few data points to suggest why that may not be the case.  There is certainly the factor of the U.S. Congress and the concerns that have been raised inside the Congress and the somewhat natural curiosity they have as to what exactly it is they are getting.  But there are some other things as well. 

There are a number of commitments made last year and Henry alluded to a previous event we had right in the wake of the July announcement between Prime Minister Singh and President Bush where I raised some of these questions.  I still have not gotten a lot of answers that are satisfying.  India committed to adhere to the Nuclear Suppliers Group.  Seliq Harrison mentioned that China was part of it.  In fact, China is an adherent to the Nuclear Suppliers Group.  India committed to adhere as well.  They have not done so.  India made a commitment regarding the additional protocol. 

I think that the assumption here in the United States was that India would in fact ratify the additional protocol.  No, we are told in fact India is not going to ratify the additional protocol at all.  Indeed, they are going to do what Iran has done, which is not ratify it but implement it but, of course, now Iran has pulled out of that.  I guess the Indians could later on as well.  They have promised to negotiate a separation agreement but they have not negotiated a separation agreement.  In fact, they have only had one meeting with the IEA and nobody has any sense of what that separation agreement is going to be. 

My understanding last year was that India was going to join the Proliferation Security Initiative talking about American interests and how you can work well on shared goals.  After all, non-proliferation, particularly weapons of mass destruction in the hands of terrorist and rogue regimes, is a shared interest.  India wanted the United States to work to abolish the core group and then they were going to join PSI. 

Guess what?  They have not joined PSI and they do not appear to have any intention of doing so.  Yes, there are suspicions that there are worries about the deal on our side, but there also suspicions that the letter of this agreement and the spirit of this agreement are not going to be adhered to.  The Indians have made it very clear to us they are not going to do anything on the separation agreement until Congress acts.  Congress does not want to act until it sees a separation agreement.  We have got some problems ahead of us and I think these are all things that are worth discussing. 

So let me open the floor to questions.  May I ask everybody, please according to our traditions, if you would be kind enough to identify yourself, wait for the microphone and then identify yourself and please ask your question, do not make a statement.  That is our privilege.  Then wait for it to be on.

Will Goyle:  Will Goyle [phonetic], India Global Initiative [phonetic].  You had wonderful statements and presentation by all of you.  My question is that, one, I think the U.S. Congress and the American people should get the message that India voted against Iran twice in the U.N. in IEA and if there was something?  And second, how much do you think the U.S. should worry about the military buildup of China and do you not think that they are like what Mr. Harrison said that in the future, China will be great trouble for the U.S. and it will be out of hand unless they have India in the region to protect the U.S. interest and the region's interest?

Dan Blumenthal:  I’ll take the second one.  I think the U.S. is very concerned today about China's military power.  It is not something in the abstract.  I mean today, right now, if the U.S. military was called upon to defend Taiwan for example, China could make matters very, very difficult for the United States today.  They can impose very high costs on the United States military, and I think in fact logically it make sense that you want to develop a relationship with India that does focus on China because, again, the biggest problem for the U.S. military in the region is access.  I mean the Chinese have developed I think the most capable anti-access and area denial capabilities in the world right now, meaning that certainly coming in from the South East where the United States has most of its forces is very, very difficult. 

So it makes great strategic sense to try to diversify your access base and India is one of them.  India could potentially be one of them.  Now I do not see the Indians signing up to anything like that though.  I do not see if we went tomorrow and asked Indians can we get in a Taiwan contingency or a Japan contingency, could we get access to your air bases because we really need to think about flying in from India. 

I think the answer would be “No.”  It might even be “Hell no.”  I think again as an aspiration, it makes a great deal of sense and hopefully the investment that you put into the relationship now if done correctly, over time the return on the investment is such that we do have a shared understanding of the importance of deterring Chinese military aggression and also providing the United States military with different access points and getting more serious about the threat from the Chinese military today or the challenge from the Chinese military today.  But I have not seen that really as part of the discussion and again, I do not see the Indians signing up to it either, at least not right now.

Henry Sokolski:  Alliances cannot be based entirely on fudge.  This is one of the hard lessons the United States keeps trying to learn itself so I’m not lecturing here.  But if you vote for an IEA resolution and then on your website, the Ministry of Foreign Affairs explained, “Well, this was the way to make sure it never goes to the U.N Security Council.”  When you vote for an IEA resolution next but you make sure you join all the others in stripping out the word “noncompliance” or “referrals” so can say, “You see, it is not going to the U.N.,” it is a little bit like fudging. 

When you say you are concerned about a nuclear Iran but you continue to complain about sanctions -- Dr. Prasad who says he was just helping out on nuclear safety but happened to know everything about tritium extraction from heavy water reactors and has been in Iran too many times by any measure and who was awarded all kinds of privileges by the state of India because he was high up in the priesthood if you will -- that is sort of fudging.  And when you work with the Iranians not just to get oil and gas which, with all due respect, I understand, but you build the naval bases with them and you are training the navy and those naval officers see the U.S and its allies as the target, it is not a big help. 

So I think and part of the discovery process not through the nuclear deal but just more generally, we need to be talking more openly and candidly about how we see these things.  We are not.  And instead, we are saying, “Oh, they are wonderful.  They are really coming our way.”  That is fudge.  That is not an alliance.

Danielle Pletka:  Is it not true on both sides?  I mean, is it not true that this debate is happening in India as well?  I mean, the BJP has profound concerns.  They are asking some of the similar questions.  What are we getting?  Is this good for us?

Male Voice:  We should get them over.

Danielle Pletka:  Well, but I mean transparency in the debate is a good thing.  Did you want to add anything?

Selig Harrison:  I think the answer to both of your questions is it depends what our posture is.  If our posture towards Taiwan continues to be one in which we do not encourage Taiwan independence and recognize how sensitive this is with respect to China and we decide not to do more to try to get Japan committed to the idea of intervention in a possible conflict over Taiwan, if we back away from posing a potential threat to China of intervention in any conflict over Taiwan, then it seems to me that we will not be in a state of military conflict with China. 

A confrontation with China in the future and the military concerns we would have about China’s modernization I think would arise from what Dan referred to as the alternative superstructure for energy security that China, he seemed to feel, is trying to construct.  That operates at many levels and at the military level, it does involve the kind of expansion of China’s naval presence in the South China Sea and the Indian Ocean to which I referred.  Again, given that overall sensible relationship with China, which is not generally confrontational, need not be a confrontational problem either but I think it is a very useful hedge. 

This is where I think the word “hedge” is valuable in discussing this strategic dimension to have good cooperation with the Indian Navy.  At some point, I wanted to talk about some of Henry’s points but maybe this is not the right time.

Male Voice:  [Inaudible] between China, it will come in Iran and also China is spreading its nuclear arsenals by working [??] out with North Korea, Iran and other countries and then China is getting away with everything.

Danielle Pletka:  Maybe we can come back to the [audio skips] getting away with everything in question and although it will not be the first time that phrase was uttered at AEI. Please.

Sumi Chibba:  My question is for Mr. Sokolski.  I’m Sumi Chibba from the U.S. India Political Action Committee and my question is [audio skips] I would have expected, as a proponent of non-proliferation, that you would have focused a lot of energy on getting Congress or the Administration to move on how Chinese weapons design wrapped in a Pakistani shopping bag ended up in Colonel Gaddafi’s basement, but you have not spent nearly that much energy but on speculating the motives of a person, Mr. Prasad I think you mentioned going to Iran.  By the same token, what commitments do you expect the Chinese to make on Fissile Material Cutoff, which is an issue that you raised and held considerably?

Henry Sokolski:  This fellow is getting a percentage of my paycheck.  It is a set up.  He is working with me.  He actually is on the payroll of NPEC.  Thank you for asking that question.  First, Mr. Blumenthal reassures me that we are going to have a panel here on China.  It was at my request that it be held because oddly enough, there is one thing I actually do agree with the Department of Atomic Energy in India about, and that is we have let the Chinese get away with far too much. 

I always say two wrongs do not make it right but in addition, one wrong is one enough and I think the United States has been playing a fudge game on that in all fairness.  We are not putting a spotlight on what is clearly an effort to have it every which way in China with regard to their arms buildup.  And for what it is worth, I have managed to and I think I can deliver the arms control community on this point because now they are starting to get nervous. 

However, I do not think that you gain a whole lot of points cutting everybody else free to try to do the same thing as China.  That is not a smart game.  At least like to fail.  That brings me to your second question.  I think the Chinese right now are in a position where they probably are not making fizzle for military purposes but have a hell of a breakout capability.  I do not think things improved by getting everybody up to their level like Pakistan and India. 

I think the smart money separate from this deal is for India and Pakistan to join with other countries to put the screws to China.  And the best way to do that is to rethink this absolutely mindless notion that, well, we have to have strategic freedom of action to build up to China's level.  There is another guy who had propounded that.  His name is Milosevic.  That is how he figured out what to do next.  What gives me the most freedom?  You know where he is.  We do not want to go there.  Well, but he also get arrested and he lost the war.  By the way, there are a lot of Americans who think that way but it is not smart.

Danielle Pletka:  This gentleman here in front, if you would mind coming around please, the intern, yes - to hear.  Go ahead.

Male Voice:  I have the microphone.  Do you think I can ask a question?

Daniella Pletka:  No.  You can wait a moment, thank you.

Selig Harrison:  Well, thank you.  I had mentioned that I wanted to make the point in response to what Henry said about the desire of some in Congress to change the terms of the understandings that were reached in July 2005 and February 2006, which I do not think is reasonable.  I mean, it is true that the nuclear cooperation agreement has not been negotiated yet, but there were very clear understandings on the basic outlines of the whole nuclear deal in the July 2005 and February 2006 discussions, which I think is correctly identified by Henry as the most dangerous and the most significant potential obstacle to this going through to Congress and that is the fact that the Atomic Energy Act does refer to, as he said, to countries not receiving technology if they test. 

That is not being challenged by India.  And in fact that that is there, what is being challenged is the fact that that is being operationalized, proposed to be operationalized in the nuclear cooperation agreement that has to be signed as an implementing document.  And it seems to me that the point to make here is simply that the United States itself has not ratified the test ban.  The United States has not ratified the test ban and its pursuing policies, which really from its nose at the test ban, where in the first place we have the capacity to conduct sub-critical tests India does not have.  The reliable warhead replacement programs is attempting to create an upgraded U.S. nuclear capabilities that do not require testing, none of which of course involves technologies that India is far from having achieved. 

So it seems to me that this issue should not get in the way of this nuclear cooperation agreement.  To have it do so simply means that we believe in U.S. nuclear dominance, not that we believe in an end to nuclear testing and it seems to me it gets to the heart of the whole point of this agreement, which is that the United States is implicitly recognizing if this agreement is enacted, that India is a de facto nuclear weapon state.  And the kind of thing that Henry is talking about is in attempting to reverse that which, as I said in my initial comments, is living in a fantasy world.

Danielle Pletka:  I know Henry wants to rebut that but since we are going to try and stop talking up here and let you do some more talking, we will have an entire round of thrilling rebuttals at the end.  You said, and I disagree, this gentleman back here and then this gentleman up front.

Gopal Ratnam:  Thank you.  Gopal Ratnam, reporter with the Defense News.  Two questions if I may for Dan Blumenthal.  You sort of drew a paddle in between U.S.-China relationship and the one that is emerging with India and in that context, you have mentioned the private deals that were struck with China which later unraveled.  So I was wondering if you are aware or know of any such private commitments that are being made in the context of this U.S.-India deal? 

The second question is you also mentioned the potential or the possibility of India perhaps joining defense architecture that is sort of emerging in the East with Australia and Japan.  And I was wondering if you know of any sort of move from the U.S. administration about any convergence between what Indian foreign policy calls the Look East Policy and this emerging architecture that the U.S. is trying to put together between Japan and Australia.  Thank you.

Dan Blumenthal:  On your first question, I do not know of any private assurance as I was responding to the point that Dani Pletka made, which is that we are partly in this trouble right now because the Secretary of State made assurances, seemingly made assurances to the Indians before consulting the Congress and that we could be in a very embarrassing situation when those assurances may be rejected. 

Similar things happened with the United States and China in the sense that if you go back to negotiating record on what Henry Kissinger and Richard Nixon said to the Chinese about Taiwan, which was very quickly moving to the Chinese position on Taiwan and then publicly having to fudge and renounce that and the Chinese not being happy with it, the Congress not being happy with it, Taiwan not being happy with it.  And today, one can argue that the Taiwan issue is actually messier in many ways because of that and we are actually closer to war.   We are closer to the potential of war because we never took the opportunity to get it right because of the fudge factor. 

On the Look East, again, you look at the strategic map and you see that a lot of this makes sense aspirationally, right, and you see some concrete moves.  I think the United States was better off for the fact that the Indians took part in the East Asia Summit because it did dilute Chinese attempts to make it Sinocentric, so you do see certain moves.  I mean I do not want to be overly pessimistic about what is going on here. 

As you have said, you see the Indians showing a lot greater interest in the safety of Southeast Asia and the seas around Southeast Asia, and you see the Japanese increasingly reaching out on issues of energy security with the Indians as well.  So, some of this is happening naturally but in a more adhoc fashion.  I mean, in fairness to India, one Indian analyst that I admire greatly said it is not as if India was admitted to a containment party, right?  The United States, being less than coherent about the direction it wants to go with China, I mean it is saying all kinds of things diplomatically.  And then I think militarily it is moving towards greater exercises, greater inter-operability with Japan, with Australia, with Singapore, with perhaps even Vietnam and trying to do the same with India.  But I do not fully fault the Indians for saying they had not been asked to join something that they have been able to say no to. 

So I do not fully fault the Indians and there is a good degree of convergence.  But again, there is a lot of interest right now, a lot of reasons why they would want to play the United States and China off of each other and they signed a strategic framework agreement with China just as soon as they signed one with the United States earlier.

Henry Sokolski:  Yes.  I mean, there are Indians that have a Look East Policy, too, and it is going to lock in as that strategic cooperation agreement with China in April does first place trade relations with China, not the United States.  I mean if you look at the dollar figures that they want to achieve in trade with China, there are reasons to be friendly to China if you are Indian, and they are trying to have a number of things just like us in this regard.  With regard to what we may have promised that is not well-known, it is that the United States official said, "There is this boiler plate about nuclear testing that we have to suspend.  But do not worry, even if we suspend we will soften the diplomatic beaches now to make sure somebody else steps up and supplies you if you do test." 

Now, the problem with that is that it has encouraged the Indians - by the way, the Indian Department of Atomic Energy has more or less insisted on this freedom of action and it is one of the reasons he wants the boiler plate off the nuclear cooperative agreement that is being negotiated and why even I think Ambassador Mulford said, "Well, maybe we have to come up with new language on that." 

If we tell everyone around the world it is okay to supply if India tests, it becomes a bit of a problem because even the Prime Minister of India said under some circumstances he could imagine the need to test again.  We have just taken away one of the downsides and perhaps the only downside that would normally accrue to that, which is we might again be in the situation India was after 1974 where it had problems getting ore and other things from other countries.

Daniella Pletka:  In any case, I think that Congress generally takes a fairly dim view of the idea that if we sanction, we can then go around encouraging other countries to do things that mitigate those [indiscernible].  That was a big controversy I believe during the Reagan years.

Dan Blumenthal:  Well, they need to be aware of this.  I do not know how many people on the Hill, but the staff is fully aware of that, we will put it that way.

Daniella Pletka:  The staffs are great, gentleman in the blue shirt here?

David Ruppe:  Thanks, Dave Ruppe from Global Security Newswire, Henry and Mr. Blumenthal, you seem to be arguing that what is being negotiated here is really not a strategic partnership, at least not sort of in the alliance sense of partnership.  Is that the case?  If not, what is it?  I just note that when the Indian Prime Minister went to Germany to meet with their President Angela Merkel, they were also talking about the Indian-German strategic partnership.  India is trying to work fighter aircraft deals with lots of different countries including the US and trying to build relationships with lots of different countries in the region, so what is going on?  What is it really?

Henry Sokolski:  I am not an expert but if I was Indian and I needed friends and help, I guess I would do pretty much what they were doing.  This is the reason why it is important that if we want it to be more than just another happy talk word that results in some activity but not much, the kinds of things Dan is saying which is, "Hey, we really need to clear the air about what we want and be clear about what we expect and be willing to actually cause a little bit of friction over the differences"  is important.  Otherwise, it will just be like the one they have with Iran, China and Germany. 

One Indian academician came here and over the Wilson and says, "We Indians do not use the word strategic partnership the way you do in the West.  For us, it is just sort of any kind of thing we can agree to, whereas you folks seem to think it is some kind of alliance or something."  Well, I do not know if that is culturally correct but if that is so, maybe we need to kind of figure out what the delta is there so we know what we are getting into.

Dan Blumenthal:  I would say just quickly that if you looked at it as a diplomatic trend, and going back to the issue of looking at it as a diplomatic transaction, I mean one of the things that I would have asked for is, we are going to form a strategic partnership in the way the United States understands strategic partnerships then we should get preferential treatment in terms of their defense trade.  That to me not only seems logical if we are going to give up some other important things but also seems to be a way to build long term strategic partnership, get the Indians off one supplier and start a lot more defense, industrial cooperation and like I said, even ask for something in return like preferential treatment on that.  And so we did not get that.  We did not ask for it and so we are having a lot of difficulty even competing in the areas where the Indian military wants to purchase new platforms.

Seliq Harrison:  In answer to your question, I think we have to stand back and look at what American interests are in the world in terms broader than "non-proliferation" and "strategic interests."   We are looking at a world in which the most important fact is the division between the rich and the poor and the growing gap between the rich and the poor in the world.  India has been an exciting place for many years because it has been the democratic effort to deal with the problems of underdevelopment and development without going to the kind of society that China has. 

Now, it may sound like rhetoric, and it may sound like it is very, very soft talk, but the fact is that the basic American interest, strategic interest in the world is in narrowing the gap between rich and poor, limiting the instabilities that are going to drag us into all kinds of problems in all parts of the world that we cannot foresee now because of this problems, not meaning the problems of development.  We are seeing in Latin America all kinds of adverse elements that are certainly adverse to our strategic interest, our energy security interests because we have not been effective in answering the populism of Latin America in the past. 

Now in India, we had a great opportunity.  Here is a country that has been constructively and intelligently trying to develop within a democratic framework but it has still got 300-400 million people below the poverty line and it has got most of these billion people living in villages that are not filling out our income tax returns, Henry.  So what this is about as I have said, and I was not just using nice words, this is about poverty in India, energy security for India that does not necessarily compete with ours by going after oil and gas alone it competes with us. 

We have just got to stop thinking that the whole world begins and ends with the good old days when people like and Henry and none of the other so called non-proliferation ayatollahs were drafting the 1978 Atomic Energy Act.  This is a long time since 1978 and there are a lot of other problems in the world.  We have got to deal with non-proliferation.  We have got to put it into perspective, thank you.

Daniella Pletka:  We do not want poor people with bombs.  I have a question actually on the energy side.  I mean I assume it is not wrong for us to have interests and to want to gain something from this deal other than the pure altruism of bringing people out of poverty.  Where are the Indians going to be buying their nuclear reactors?

Seliq Harrison:  That is not altruism. 

[Cross talking]

Daniella Pletka:  Where are the Indians going to be buying their nuclear reactors?  Are they going to be buying them from the United States and manufacturers here?

Henry Sokolski:  No.  Two days ago, I have copies of this letter and I will be happy to share it with anyone, I discovered that a letter from the utility vendor of the United States went to the Secretary of Energy I think in March, and it basically said, you have got to be kidding if you want us to be selling abroad for your global nuclear energy partnership or to India.  Our exposure to liability is 100 percent.  There is no insurance pool in most of these countries, and the rules allow, as they currently stand, allow countries like India to have their litigants if there is another nuclear [indiscernible] of some sort to come back to the vendor, not the just the operator in India and sue him. 

You have got to correct this.  Now what this operationally means for the next several years because the way you correct this has to do with passing a treaty and getting a certain number of people to sign, and it will take more than a few weeks, is that those countries that have the utility vendors owned by the government, that would Russia and France, will go in and make the few sales that are going to be made.  I do not think there are many and it has to do with understanding the nuclear energy system in India. 

By the way, we will be posting a detailed analysis of India's nuclear power program past and future in a few days on our website at www.npec-web.org, and you should go and take a look and if you can buy a better scotch buy it.  I think the analysis is very solid but it does not promise big gains on anything having to do with energy, much less energy for the poor.  It is an unleveraged way to address that problem. 

In any case, the first reactors are going to be Russian.  They are already there.  They are being built.  I suspect if there are any sales at all they will be Russian.

Daniella Pletka:  I am so glad we were able to allow you that propaganda moment as well, this lady in the black sweater right here?

Nadia Naviwala:  My name is Nadia Naviwala from [indiscernible] Associates.  Touching on what Mr. Harrison had just said actually regarding the threat of India's rising demand for oil.  It is something that has had a lot of rhetoric on the Hill.  There is a threat of the prospective rise in India's and China's demand for oil but in a recent hearing before the Senate Foreign Relations Committee, one instance had commented that nuclear energy is not going to do much to change the energy balance because India primarily relies on coal and the demand for oil is only likely to rise from three percent to four percent in the next few years. 

So, to what extent is India really a threat to the United States in terms of the demand for oil?  I mean Mr. Sokolski had commented on this but how much is nuclear energy really going to change that and if our concern is coal, then it sounds like the motivation for this agreement would be environmental and I have reason to believe that this administration, that is not their primary concern.

Daniella Pletka:  Surely not.  Seliq Harrison and Henry and I think are going to answer you.

Seliq Harrison:  Very briefly to say that in the short run you are quite right.  The impact of any nuclear sales by Russia, France, Germany, US, or anybody is not going to be great in the short run.  We are looking at the long haul here.  We are looking at several decades ahead.  All the projections that had been very carefully made in India are for steadily expanding civilian nuclear power program. 

So in the short run, you are quite right but over time, it is really going to be very important it seems to me, 20 percent or 25 percent if you look far enough ahead of India's energy picture can be nuclear, and I think will be.  It depends on the argument about how long it is going to take.  Of course, oil and gas and coal are going to be the majority, 75 percent even after this has changed.  In the case of coal, we have to be honest and say that the reason India is not using this resource more effectively is because of the mafia running the coal mines, in league with the labor unions in that area, and this is a political problem. 

There are also big political problems in implementing the nuclear power agreement in India in the State Electricity Boards, which I discussed this with Mr. Manmohan Singh, and I said, "How can you carry this agreement forward if you do not get those State Electricity Boards operating in a more rational and less political, less bureaucratic way?"  He said very confidently that there was legislation and regulatory answers to this but the fact is, there are big political problems that India has to deal with in order to make the nuclear cooperation agreement work. 

First, with the State Electricity Board, second with the coal mine mafia, and there has to be more coal produced.  It is a natural for India.  They are going to continue to take a lot of oil and gas from places where we want them and therefore it is desirable to limit that as much as possible through more and more nuclear over the years.  President Bush has made his main political justification for this in his press conference in Delhi, and I think that is true.  But it has nothing to do with the fact that all the energy studies that are really competent in my view show a much bigger role for nuclear power as essential given maximum assumptions of what you can get through these other means.

Henry Sokolski:  Let us pocket that; it will take several decades at best.  That means maybe we can take a few extra months on this deal.  I think the hysteria associated with nuclear power and what it might do for India and the world is like the enthusiasm of 1953 in Atoms for Peace, where we were going to have electricity within months, too cheap to meter [??] all over the world.  What we ended up with is a lot of plutonium producing reactors and a lot of people trained on how to make bombs.  We need to slow down a little bit.  We have the time even by the proponent's own measure. 

Second of all, as you grow a grid - and by the way, the grid is one of the longer poles in the tent to make anything that is a base load generator, whether it is nuclear or coal increase.  As you increase that grid, you are going to increase a couple of things whether you put nuclear on there or not.  You are going to increase coal use because it is going to be cheaper to put it on and actually, India is like number two or number three in coal.  So I mean there is a big vested interest to keep digging that stuff and burning it and reasonably so. 

The second of all and non-intuitively, as you make something that is a base load generator, that is a machine that is on all the time and it takes care of what you know is demand.  It does not take care of when people come home and turn on all the lights in an erratic way or if there is a heat wave and everybody turns on air conditioners.  That is called peak load.  As you build more base load in a grid, guess what you have to build more?  It is called peak load.   Guess what it uses - natural gas. 

So the idea that you can use nuclear and build it up and wean or reduce the amount of demand for natural gas is like probably the opposite of the truth.  The transport demand now for getting oil is what is driving consumption of oil as its industrial use.  The nuclear electricity is going to have about that much effect on those demands for the next several decades.  I mean, you are going to have to electrify cars, which is something we are having a big challenge doing here before there is any impact there. 

Last but not least, the grid does not go everywhere.  One of the great opportunities that the Indians can participate in that we cannot here in the States, is to leapfrog some of the foolishness we have engaged in by depending entirely on base load generation practically, and that is distributed systems.  The Indians actually have a pretty good track record spending modest sums of money and getting enormous amounts of distributed electricity.  They have right now more distributed electricity in wind, small hydro, et cetera, than they have online that is nuclear and they spend about a tenth less to get that larger amount. 

Now there are differences.  A lot of this stuff is not useful for base load generation but the point here is that some of the greatest opportunities have nothing to do with the grid or nuclear electricity. 

Finally, it pays not to steal electricity if you want to save it.  This is a complex idea but a lot of Indians steal electricity off the grid.  They do not pay anything for it.  It is either given to them or they bribe someone and just suck it right down and that is about 25 percent of the electricity right now.

Male Voice:  Twenty five percent?

Henry Sokolski:  It is about 25 percent.

Male Voice:  Can you prove it?

Henry Sokolski:  Well, these are the figures that these poor guys are struggling with.  It is hard to prove because frankly, a lot of it is done illicitly but there are enormous savings to be had in trying to correct that.  That will not be easy.  That is political, but you are talking about many gigawatts right there.

Danielle Pletka:  This is lady in green back here.

Nadia Naviwala:  Can I get a followup just…

[cross talking]?

Danielle Pletka:  In a moment if you do not mind.

Nadia Naviwala:  Okay.

Stephanie Howard:  Thank you.  I am Stephanie Howard, Voice of America.  I just wanted to ask a question about the status of the deal in Congress or so.  Several things:  How likely is it that it will be passed?  How imminent is this possible passage going to be and what are the main sticking points?  Thanks.

Danielle Pletka:  You mean we have not gone enough into the sticking points that we see?  There are hearings today I know, which should be unimportant though - Henry did you want to answer that question?  I know you been following it closely.

Henry Sokolski:  This is painful to say but you do not win them all.  It will get marked up this package - in June is my hunch.  It will probably get reported out, you do not think so?  Well, there you go.  Maybe in one House, and we will see but the bottom line is as far as getting the package voted on on the floors, all bets are off.  That is just totally unclear, and I think that if anything, things are not looking up and that is the reason why I say get it right, you got the time.  Keep in mind the votes in general are there for approving some sort of deal.  

The specifics that I mentioned matter a great deal.  There was a letter that was just put out by Howard Berman, I recommend it, Congressman, Democrat, California.  I think he is number three in ranking and he is usually a pretty quiet guy.  He is not like some of my more enthusiastic members.  That he has spoken up and written a letter of concern and listed what he is worried about gives you a kind of Michelin guide of what might be debated first of all in the markup, and what might slow floor action.

Danielle Pletka:  I just do not know, I mean I think that Congress has been very badly mishandled and while there is always pressure from the executive branch to have the Congress not make a fool of the President when he makes a promise, one needs to question who the fool is.  Who makes such promises without asking the Congress what they think first? 

I think there is a lot of doubt on the Hill about this, and I think it is important to note that the White House legislation was introduced both by Senator Lugar, the Chairman of the Foreign Relations Committee and by Representative Henry Hyde, the Chairman of the House International Relations Committee.  They both did that under the system [??] that is called by request.  In other words, they introduced the legislation but they did not introduce it as their own.  They introduced it as a request of the administration, and I do not think either of them are terribly enthusiastic in my understanding about moving that legislation as is.  In fact, I do not think that Representative Hyde is going to do so as my understanding of the latest piece of information, so watch that page.  It should be very interesting. 

But let me see if there is anybody new who wanted to ask a question.  Okay, in which case this young lady had a followup.

Nadia Naviwala:  Okay, this is more of a second, related question but if India’s demand for energy is going to be rising within the next few decades and just in general it seems that the world’s demand for energy is going to be rising within the next few decades not just energy, I mean not just India.  And with this type of trend on the rise and the prospect for nuclear energy to meet these needs, do you think that maybe we should be looking more at how to deal with the question of civil nuclear energy and our non-proliferation standard accommodating that?  Develop some standard by which other countries which are also good but we also want relationships with because there definitely are more of those and there will be more, maybe we should be dealing with that question instead of working on a case by case basis and disregarding and overlooking the standard that we have developed?

Henry Sokolski:  Well, run by policy wonks, you would be right.  But we do not live in that world on two counts.  First, every case in controversy is what creates policy not the general norm, so that you sometimes can make policy with specific cases that has general applications.  One of the concerns of both critics and proponents is what exactly does this deal mean for the future of the rules towards others?  Some say it is exceptional and will not apply.  Others like me say, “Oh, no, no, no you are breaking the rules.  This is the new norm.”  It is going to apply to this country or that country, whatever. 

So the problem though is you have to have an India to have that debate, so your bite at the apple is right now if you want to have - I think Congressman Berman, for example, is trying to put forward a piece of legislation that is country-neutral.  I do not know how well that will work but I give him this much credit as he can get and we will see.  But that debate arises out of specifics. 

The second reason I think the world will not work that way is despite the enthusiasm of people lobbying for nuclear power, the truth is we are somewhere with electricity, energy distribution, energy production and storage where we were at the turn of the century when we did not know whether it was alternating or direct current.  We did not know whether it was coal or oil.  We did not know whether it was horse drawn propulsion or automobiles that would be dominant for certain periods.  In such a world, you do best when you think about what you do not want rather than what you think you want. 

And in that regard, I think it would make sense to figure out how to toughen up the rules about the spread of certain things like carbon emissions if that is what you are worried about, or bombs or nuclear fuel-making facilities.  But I think once you state that in law, you need to let more of the market make decisions, which are unfathomable and impossible to anticipate and which involved tens and hundreds of billions of dollars worth of capital expense.  And if you make a mistake, you are stuck with it. 

Are you familiar with the canal system out here?  Have you ever gone along the toe path?  The entire country in the [indiscernible] was convinced it was not nuclear power but canals that would connect the country and every State invested in making canals.  They missed this thing called the steam engine and they all went broke.  And now there are laws that say whenever there is a bond issue we have to vote on it.  That is where it comes from. 

I would submit that right now, the smart money is on figuring out what you do not want and letting the market figure it out how to make sure that does not happen and you can even lay out what you do want in a sense, but do not specify the solution.  Let markets do that.  That is something the U.S. needs to learn more and God knows India needs to learn more.

Danielle Pletka:  Okay.  I think we have a question over here, this gentleman?

Nimai Mehta:  I am Nimai Mehta from George Mason University.  The India-U.S. nuclear initiative seems to have a long history to it going back to the early 1940s, and the recent attempts seem to be more an attempt to maybe normalize the relations in some sense.  That is, the West, U.S., Britain, Canada and France have been active partners in the 1940s with India to reinitiate its nuclear energy program and meet also some of its strategic interests, so there is a lot of historical baggage to this deal. 

And so with regard to the current deal, if one tries to look beyond the nitty-gritties of this deal, the energy supply issues and the NPT [phonetic] issues, in terms of the broader strategic interest, it seems to be a fudge factor on both sides in some sense.  I am interested in the notion between the differences between strategic interests, as opposed to a strategic alliance.  I remember reading about in the 1960s and 1950s in India, there was an interest expressed on the Indian part about asking the U.S. whether the U.S. would be prepared to provide some form of a security blanket to the Indians. 

So from the perspective on what India could expect in terms of broader strategic alliance, whether that is still something that the U.S. would consider, and I am just throwing that out to see if you have any response on this.

Dan Blumenthal:  It is not something that I see at least the Indian strategic elite is talking about.  What I really see is a desire for as much independence of action among the Indians strategically as possible with regards to how it behaves.  The way I read the India strategic debate is that they want to carve out more of a space in South Asia, Look East as well in terms of having strong interest in East Asia, but have as much maneuverability as possible. 

And so with regards to the way this deal is being sold in the United States, that this is going to turn into some sort of a counterweight or some sort of alliance with India with regards to the problems we are having with China, it is why I am skeptical at this point because I think India is not asking for an alliance.  It does not really want an alliance.  It wants to, as most countries do, wants to pocket as much as it can.  When you get down to talking to Indian military officers or strategic thinkers about what the most important part of this partnership is to them, it is advanced military technology, right?  So obviously not a nuclear umbrella like Japan or South Korea because for obvious reasons, that is not what they are interested in.  And certainly not being tied to the United States because an alliance of course would be mutual, right? 

So, certainly not being tied to the United States in terms if the United States is attacked all of a sudden, India or a U.S. ally is attacked all of a sudden, India has to commit its own forces.  I do not think India has any interest in that from what I read.  The way I read this is, India is trying to carve itself, because it is emerging, because it is growing very quickly and it is emerging as a great power, it is trying to carve out more space for itself.  It is concerned about encroachment by the Chinese into South Asia in particular, Southeast Asia as well, has some interests converging with the United States on that issue, and then I see the United States — if you really thought about it from a strategic prospective and again not in terms of thinking 15 to 20 years down the road. 

The United States should be making this kind of investment in trying to build some sort of partnership with India and being very realistic about what that means, and how much time it will take to do so just because I think the strategic culture in India is very independent-minded.

Seliq Harrison:  I do not think that there will be a strategic alliance between the United States and India going out of this agreement or anything else because of all the well-taken points that have been made about India's desire for independence of action in foreign affairs.  But that does not mean, and I do not think it will be politically supportable to have such an alliance.  Dan mentioned access to Indian ports in time of crisis with China.  It really is the most specific point that you raised as a question.  It seems to me that it would not be in the United States’ interest to pursue policies towards China that are going to lead to that contingency.  So if the U.S. pursues a sensible approach towards Asia in which it tries to maintain instructive relations with both India and China, then this issue becomes moot.  But I do think that the concept of a counterweight is not the same thing at all as the concept of a strategic alliance. 

To me, what a counterweight means is if you have a strong stable India, you have a counterweight to a China expanding its influence in all kinds of ways including military all over Asia and that is in the U.S. interests.  But that does not mean that India itself is not going try to avoid direct conflicts with China.  So I think this notion of a strategic alliance is unfortunate.  The word “strategic partnership” have provided a rhetorical framework for close cooperation in many spheres between countries that do have tremendous technological inter-dependence, compatible market economies and a congruence of geopolitical interest in some of the areas of most concern to us right now.  But it is not incompatible with notion that India, in the final analysis, wants to be free to make its own decisions.

Danielle Pletka:  Actually, what I would like to do now, it is quite late so I’m not going to take any more questions.  We have a speaker coming at noon.  What I would like to do is just turn to the panelists, all of them have pent up brick brats they would like to throw at each other and perhaps at you as well, but certainly not at me and let them just give a quick word of conclusion or rebuttal for their colleague's points and then we will wrap up.  Dan, do you want to start?

Dan Blumenthal:  Yes.  The thing about just taking exception to Selig's comments about China, I think we faced a problem today whether we like it or not.  I mean we can talk about again as we have been talking about for a couple of decades, the aspiration of having a constructive partnership with China, but then we have to face the fact that the situation has changed tremendously today.  And so, therefore, we do have commitments in East Asia. 

We do have a position that we want to maintain, so we do have some problems today that it would make a great deal of sense to try to fix.  Access is the biggest, and if we cannot get access in India, we need to seek it elsewhere.  This is the reality of the situation we face today.  It is not that we are an enemy of China, it is that China has a military now that can pose great problems to the defense commitments that we hold today, and we need to do something about that.  That is not something I can expect or I would expect India to supply anytime soon.

Henry Sokolski:  When I hear the word “counterweight,” I think of the word “deadweight.”  I mean, all these words, but in essence if the government has gone out of the way, a lot of good would happen, probably more than anything doing with this satellite launch cooperation and a nuclear deal for sure and maybe even all the rest.  A lot of Indians need to get into the United States and we are making it difficult.  Get out of the way.  A lot of American and foreign money wants to get into India.  The Indian government is making it difficult.  Get out of the way.  We are constantly pushing what little we have as governments to share for a lack of imagination about what is possible if we could just get them out of the way. 

This then brings me to this nuclear deal, and I did not say word about this satellite launch cooperation deal, but you can also go to my way web on that.

Male voice:  Is it further explained in there?

Henry Sokolski:  Yes.  It seems to me we are in it, like it not.  It is our diplomatic Vietnam.  Let’s get it right so it does not become more of an irritant in relations between our countries and with others than it has to be.  Just rushing to get the “yes” is not the smart game for the long haul.

Danielle Pletka:  Thirty seconds please.  Mr. Harrison.

Selig Harrison:  No more rebuttals, just a comment.  I ended my prepared comments with the statement that if we do not conclude this agreement successfully after so much has been invested in it, it would affect the nature of the relations between the U.S. and India.  I do not want to be misunderstood.  I think that regardless of what happens to this agreement, the United States and India are moving toward a much closer relationship because there are so many areas of technological and economic interdependence that that is going to sustain compatible market economies and democratic values. 

So I think we are headed toward a closer relationship, a compatible relationship with India, a growing relationship with India.  But what I see at stake here is the degree of intimacy, the degree of closeness and the degree of implications in this broader strategic picture that could emerge.  So I think there is a great deal at stake but I do not want it misunderstood when I refer to a Gaullist India, I’m talking about the long-term future and India wants to be independent and freewheeling. 

But the degree to which that occurs, and the way it comes into conflict or it does not come into conflict with the United States will be determined over time, over a period of decades, by how much we develop this natural relationship of close cooperation and that is what is at stake here.  So, I just wanted to make clear that I did want to sound like a prophet of doom because I think the basic prognosis is very upbeat.

Danielle Pletka:  Plus Henry is the prophet of doom.

Male Voice:  We all agree.

Danielle Pletka:  We are going to be joined in about two minutes by Philip Zelikow, who is the Counselor to the Secretary of State and counsel to the Department of State, and one of the most active proponents and thinkers behind this deal, so I hope everybody will stay with us for the next few minutes.  We will have a panel after that as well, and in the meantime let me thank our panelists here today for a very lively discussion and our audience for very good questions.  Thank you all. 

[End of first session]

[Start of second session]

Dan Blumenthal:  Ladies and gentlemen, we are going to begin our luncheon speaker a little bit early because Dr. Zelikow has to leave a few minutes early, and he is kind enough not only to come and speak to us today but also to take some questions after his presentation.  It is my great honor to introduce Philip Zelikow today, the counselor of the US Department of State.  He has had a distinguished career both in academia and in government.  He served on the National Security Council Staff during the George H.W. Bush Administration and also taught at Harvard, at the University of Virginia where he was the Miller Professor of History and director of the Miller Center for Public Affairs, and has studied the American Presidency in a great amount of depth, having been a co-author of the book Essence of Decision: Explaining the Cuban Missile Crisis. 

He has been a member of the President’s Foreign Intelligence Advisory Board during the first administration of the current President Bush, as well as staff director of the 9/11 Commission.  He also had time to draft or be part of the drafting and conceptualization of the 2002 National Security Strategy of the United States which, of course, planted many of the seeds of the current thinking about where the United States is going with respect to India.  He is very involved and has been very involved in conceptualizing the US-India Strategic Partnership, and that is why we are so pleased to have him today and he is the perfect speaker for this conference, perfect keynote speaker for this conference. 

So without further ado, I would like to call Dr. Zelikow up here for his comments, and then we will turn to questions and answers.  So please, join me in welcoming Dr. Zelikow.

Philip Zelikow:  Thank you very much.  I am sure there are a few people around the corner who cannot see me, which may turn to be a wise choice on their part, I don’t know.  But anyone who wants to move around for a better vantage point can do so.  At least I can see them if they raise their hands.  I am grateful to the American Enterprise Institute for giving me a chance to talk about US-India Relations in this important civil nuclear deal. 

I will give you a little bit of background - the basic decision to go forward with this deal was made in March and April of 2005.  The basic decisions about how and when to go forward with this deal in the US government were made in May and June of 2005, and then the issue was raised with the Indian government, culminating in the fundamental political announcement that was made in July 2005, which then produced a series of negotiations to refine and flesh out the deal that were announced when the President visited New Delhi earlier this year.  Now, the issue is in the US Congress. 

With that thumbnail sketch of chronology in the back of our minds, let me just say a few words about where we were before 2005 and where we are going now.  Where we were:  First, we had a limited partnership that was budding with India.  Really, since the end of the Clinton Administration, at the very end of the Clinton Administration, President Clinton was looking for some way to turn a page in relations with India.  There was a visit to India, there was an effort to do that that was hamstrung by some of the same issues that bedeviled the relationship through the first Bush Administration.  A limited partnership, the Bush Administration in its first term was really committed to trying to create a stronger strategic relationship with India; it intensified the quality of the engagement of the United States with the Indian government. 

But still, progress seemed incremental, seemed halting.  It was a limited partnership.  It was limited because the basic problem of India being outside of the non-proliferation community suffused many aspects of the relationship both directly and concretely but also symbolically, and in a lot of ways, just kept the relationship from being able to attain its potential.  So you had a limited partnership. 

Second, India was outside the non-proliferation community.  It was not an enemy of the non-proliferation community.  It was not an outlaw but it was outside the non-proliferation community.  Its scientists, its policy makers had not really become acculturated to that community’s norms in the way that all the other major countries of the world in the sense had been. 

Third, India, faced with massive energy needs and putting energy development at the very top of its domestic priorities, was forced to pursue almost all of its energy development down problematical pathways.  Increasing reliance on fossil fuel imports almost desperately of all kinds from wherever they could get them, accentuating the inevitable dependence and unhealthy relationships.  Or in the case of hydroelectric power, increasingly searching out for rivers or other hydro sources that actually raised new political problems and ecological problems, including potential political and ecological problems with Pakistan in competition over water resources in that delicate region. 

So, a limited partnership with India outside the non-proliferation community with its major domestic energy concerns being pursued almost exclusively down problematical pathways - what this really was before 2005 was a relationship characterized above all by certain structural ambivalence.  Everyone mouthed, including the Indians, the desire to have better relations and a stronger partnership.  But somehow, it could not really proceed in any way but incrementally. 

Somehow, it could not really go forward decisively because there was this ambivalence at the heart of it because in a fundamental way, directly and symbolically, India really could not join the ranks of the great powers.  India really could not become a part of the establishment because it had so long been in this halfway house to which it had been consigned for generations because of the anomalous circumstances of the development of its nuclear weapons program in the 1960’s and 1970’s. 

Where are we now and where are we going?  First, opening to a full partnership, and its worth taking a moment to explain the strategic significance of this against Salig Harrison, I know, who has done so many others here are aware of it.  But as a sometime historian, let me step back and take a historical perspective in these matters.  There comes a time from time to time in the evolution of nations in world politics when there are important opportunities to forge fundamentally new relationships.  Let me give an example of the relations the United States forged towards two opposite ends of the Eurasian land mass in the late 1940’s and early 1950’s. 

The United States essentially decided to break from past historical practice and create basic anchors of enduring partnerships with the Western European edge of