The India-Canada Civilian Nuclear Deal

Anita Singh. International Journal. Volume 65, Issue 1. Winter 2009/2010.

Regimes to control weapons of mass destruction have been impressively effective, making nuclear acquisition less simple and significantly more expensive. Yet despite these mechanisms, a few states still find it to their self-defensive, prestigious, or strategic advantage to develop nuclear weapons, regardless of the dramatic international response to these proliferation decisions. India, in 1974 and then again in 1998, made such a decision, testing a nuclear device and announcing its intention to become a nuclear weapons state. Since this announcement, India has been an international nuclear pariah, a status compounded by its refusal to sign the nuclear nonproliferation treaty, the comprehensive test ban treaty, or the fissile material cut-off treaty. It is this breach of the international regime that has raised questions, frustration, and even anger about the 2005 announcement that India and the United States were negotiating a civilian nuclear transfer agreement, effectively transforming 35 years of American and international nuclear policy. Detractors from the agreement declared the end of the international nonproliferation regime, arguing that the deal rewards India’s nuclear proliferation and signals to other aspiring nuclear states that legitimacy is gained by those that “wait it out.” Supporters of the deal argue that the regime has been so strict in implementing the principles of nonproliferation and disarmament that there has been no room for states like India, undermining the regime’s ineffectiveness.

Canada made the decision to pursue its own nuclear transfer agreement with India in August 2008, following negotiations at the International Atomic Energy Agency (IAEA) and the Nuclear Suppliers Group, yet few analyses have examined the effects such a deal would have on Canada’s own foreign policy. Not only has this decision determined Canada’s own nuclear position, but it changes Canada’s nuclear relationship with the United States and the larger international nuclear regime, and affects its broader South Asian foreign policy.

While the bulk of debate has focused on the deal’s nonproliferation and disarmament effects, this article argues that the Canadian decision to sign a deal has major positive outcomes. First, the article offers a brief nuclear history of Canada’s bilateral relationship with India. It goes on to establish the context of US nuclear policy leading up to the deal, particularly in relation to the events of 11 September 2001. It then details the central objectives of the so-called 123 deal (after section 123 of the US Atomic Energy Act), particularly India’s energy requirements and the US nonproliferation stipulations; examines the major arguments for and against the 123 agreement in the area of international nonproliferation, with a focus on how these perspectives relate to Canada’s nuclear objectives; and, finally, discusses three major arguments supporting the Harper government’s decision to sign a civilian nuclear deal with India.

Canada’s Historical Nuclear Relationship with India

For obvious reasons, Canada’s nuclear policy developed in parallel to its bilateral relationship with India. At the time of India’s independence, there was a friendly relationship between India’s Jawaharlal Nehru and Canada’s Louis St. Laurent and Lester B. Pearson. Nehru’s commitment to peaceful civilian nuclear energy and global disarmament was assuring to Canadian leaders, who insisted that India begin its civilian nuclear program with investment in the CANDU reactor. While Canada was committed to the idea of peaceful nuclear energy, there was hesitation by some members of the government who recognized that India’s nuclear interests might be less benign than once assumed. Canada’s decision to move forward with a nuclear transfer relationship with India was based on three arguments. First, it was possible that other states would offer India nuclear technology, but at least Canada would be in a position to offer the adequate safeguards to stop proliferation. Second, it was assumed that the newly formed International Atomic Energy Agency would play a role to ensure India’s reactors were properly safeguarded. Third, Canada thought that India did not have the technical ability to pursue a military program based on the CANDU design.

It was not until Nehru’s death in 1964, against a backdrop of hostile Indo-Pakistani relations and a military and territorial loss to China in 1962, that India’s new Congress government became interested in pursuing a military nuclear program. India’s subsequent nuclear test was a particular shock to Canada, as India’s three CANDU reactors had been intended only for civilian purposes. Canada’s hard-line reaction to the test stemmed from its own failures, as the government felt India’s nuclear proliferation was the product of its failed attempt to monitor compliance, assure verification, and insist on safeguards on the CANDU reactors. With Canada’s reactors, India was able to transform from a “nuclear-capable” state to one with the ability to develop its own reactors.

Because the negotiations had resulted in less-than-satisfactory safeguard mechanisms, India’s nuclear test resulted in an immediate strengthening of Canada’s nuclear policy. Before the tests, Canada focused on two major nuclear objectives, the strengthening of the nuclear nonproliferation treaty, which had been formalized in 1968, and ensuring that Canadian technology would not be used for “illegal” nuclear proliferation. After the tests, the policy established that Canada would not engage in nuclear trade with any non-signatories of the nonproliferation treaty, would insist on unconditional full safeguards on all Canadian nuclear transfers, and would implement a full cessation of trade for nuclear-testing states.

Because of India’s perceived betrayal, the Canada-India relationship remained rocky throughout the 1970s, and it was not until the late 1980s that Canada allowed some leeway vis-à-vis the Indian nuclear program. In a “new moral imperative” to avoid all potential humanitarian and environmental disasters, Canada took steps to offer safety inspections to all states with CANDU reactors. To show its commitment to nuclear safety without supporting weapons proliferation, Canada remained firm that its support would only exist for critical safety problems. Thus in 1992, when India requested that this support be extended to both its IAEA safeguarded and its non- safeguarded reactors, the deal fell apart.

Negligible improvements to Canada- India relations throughout this period were not spontaneous; rather, the two states had worked towards improving relations since the fall of the Soviet Union and India’s subsequent economic liberalization and growth. India’s economic growth was not ignored by foreign states and in January 1996, then- Prime Minister Jean Chrétien led a 300-person Team Canada delegation to India. The government’s objective was to match India’s business requirements to existing Canadian capabilities, emphasizing opportunities for Canada in the growing Indian market. Team Canada was composed of several ministers, premiers, and businesspeople, and returned with 75 contracts worth $3.4 billion dollars.

Despite this developing economic relationship, and in an expression of its own major power status, India declared itself a nuclear power with two nuclear tests in May 1998. As anticipated, India’s—and Pakistan’s subsequent—nuclear capabilities were severely condemned by the major and middle powers, including the US, European Union, and Japan. Canada was the most severe in its response, recalling its high commission, cancelling CIDA programs, suspending trade talks, opposing India’s request for World Bank loans and challenging its security council permanent seat bid, and taking an anti-India stance in subsequent G8 meetings. Foreign Minister Lloyd Axworthy’s Wilsonian viewpoint manifested in a personal crusade against violators of international norms like India with its secondround nuclear tests. While advocating isolation and punishment for India, Axworthy attempted to enforce his perspective through soft diplomacy and economic mechanisms, maintained for longer than any other state. Of course, this position did not go unnoticed by India, and a tit-for-tat strategy began to emerge. When Canada refused the visas of several visiting Indian members of parliament, India responded by refusing travel to Canadian Senator Lois Wilson.

Canada’s anti-India stance only ended after the attacks of 9/11 and the entry of John Manley into the foreign affairs portfolio. In the face of the war on terror, Canada slowly took steps to involve India in its larger international plans. The July 2005 announcement between the US and India was positively received by the Liberal government and by September 2005, alongside France and Britain, Canada proposed its own civilian nuclear transfer deal with India. India was taken by surprise in March 2006 when, during a visit to Pakistan by Canada’s new prime minister, Stephen Harper, it was announced that Canada was currently reviewing the “controversial” nuclear deal of the previous government. Harper underscored his position that no nuclear transfer deal would move forward without Indian acquiescence to the nonproliferation treaty. Then, in August 2008, Canada flipped its position once again without conducting its review, supporting the deal in both the IAEA and the Nuclear Suppliers Group in August 2008. Under the auspices of a ministerial trip to India, coupled with other Canada-India initiatives, including a potential free trade agreement, Canadian officials began the first round of negotiations towards a nuclear deal with Indian technocrats in February.

The Us-India 123 Agreement and Post-9/11 U.S. Nuclear Policy

Prime Minister Manmohan Singh and President Bush today declare their resolve to transform the relationship between their countries and establish a global partnership. As leaders of nations committed to the values of human freedom, democracy and rule of law, the new relationship between India and the United States will promote stability, democracy, prosperity and peace throughout the world. It will enhance our ability to work together to provide global leadership in areas of mutual concern and interest.9

Canada’s decision to sign a nuclear transfer deal did not occur in a vacuum and was heavily influenced by the US position on India’s nuclear status. Similarly, the US, due to challenges to the nonproliferation regime, such as the North Korean and Iranian programs, coupled with security threats in the post-Cold War and post-9/11 international environments, has altered the emphasis it places on international goals and objectives. Specifically, September nth forced the administration to reconceptualize the nuclear threat. Nuclear weapons could now be wielded by a new genre of rogue and fundamentalist states, as well as terrorists with potential access to weapons of mass destruction. Therefore, the American government is keener to reward stable states that adhere to democratic ideals, such as India, than it is to continue to punish these states for their nuclear proliferation. As one of the most tangible outcomes of the shift in American nuclear policy, the United States-India agreement has aimed to provide energystarved and uranium-poor India with resources to fuel the economic growth of its massive population. Therefore, since its announcement in July 2005, the United States and India have identified three major outcomes from the civilian nuclear transfer deal.

First, the deal aims to increase the nuclear energy supply to address India’s growing energy demands, established by its energy requirement benchmarks for the next five decades. In 2007, only three percent of India’s energy—3100 megawatts—came from its nuclear program, and it continues to be highly dependent not only on oil, but on high-emission coal-based energy. India’s goal of producing 20,000 megawatts of nuclear energy by 2020 would mean that almost 20 percent of the country’s current energy output would come from nuclear sources. By 2050, with the help of the US-India nuclear agreement, India expects to be producing 400,000 megawatts of nuclear energy. The office of the prime minister notes that “to make up the difference using coal-based generation would require about 1800 million tonnes of coal per year in 2050.” These ambitious goals are limited by India’s lack of uranium natural resources, exacerbated due to trade restrictions established by the nonproliferation treaty and the Nuclear Suppliers Group. The uranium supply that India does have is invested in start-up requirements for reactors and also as fuel for its breeder reactors. Without the help of imports, India’s nuclear scientists recognize that India’s nuclear-energy production would peak by 2020. As India’s foreign ministry noted, “the truth is that we were de spate … if this agreement had not come through we might as well have closed down our nuclear reactors and by extension our nuclear program.”

Second, for the first time since its 1974 nuclear tests, India will allow IAEA safeguards on its nuclear reactors. At the basic level, the deal allows technology and raw material suppliers to place contracts with counterparts in India’s nuclear industry, including government institutions, between the two states. In return, India will choose which reactors will be eligible for safeguards, and it has promised that 65 percent of its entire nuclear program will come under these safeguards by 2014, up from the 10 percent that are currently under safeguards. As of 2009, India has 15 nuclear reactors, with plans to build eight more by 2020. Of these 22 reactors, 14 will be under IAEA inspections and eight will be designated as military sites, including two breeder reactors located at Kalpakkam. Three other initiatives have furthered India’s safeguard contributions. India has promised to have its CANDU reactor closed by 2010. It has also allowed that all future reactors built in India will be subject to safeguards. Finally, it has agreed to place a number of nuclear research facilities under safeguards, include the Tata Institute of Fundamental Research and the Saha Institute of Nuclear Physics, but not including the Bhabha Atomic Research Centre in Mumbai. The US administration can still consider this a victory, as India is bound by the deal to create a firewall between the two programs to ensure that nuclear material, expertise, and technology will not be transferred between the civilian and military facilities.

Third, the deal has also managed to get India to concede to an eventual moratorium on fissile material production. With safeguards in place by 2014, experts estimate that India could operate its breeder reactors to produce enough fissile material to increase its weapons stock from an estimated 60 to between 100 and 150 nuclear weapons. Critics have argued that the deal enables India to use imported uranium for its civilian program while using its own uranium supplies for its military program, facilitating proliferation within the subcontinent. While this accusation is not entirely false, there is little guarantee that India would not have produced weapons-grade fissile material regardless of the deal. Instead, the India-US deal establishes a timeline to end India’s weapons production and, in addition, has included a clause that would end the deal if India engages in further nuclear tests. More importantly, through forthcoming American uranium exports with India, the US has established control over nuclear trade that might have otherwise occurred through more clandestine and illegal outlets.

Despite these seemingly positive outcomes, the negotiations to finalize the agreement took nearly three years, working through several barriers at the diplomatic, bureaucratic, and cabinet levels. Starting with the technical negotiations, there were a number of sticking points that challenged both parties to the agreement. First, to American discontent, India requested that it be allowed to maintain a sizable uranium reserve, arguing that if the deal were ever to be called off (because of an Indian nuclear test), India would be stranded without the electricity generated by its nuclear plants. Initially, the US was against this stipulation, arguing that if the deal were called off, India would then be free to use the uranium traded under the auspices of the deal without safeguards or verification. Yet, after negotiations, the prime minister’s office in India has confirmed that the final 123 agreement does allow for a “strategic reserve of nuclear fuel.” The agreement further specifies that “[i]f a disruption of fuel supply occurs, the United States and India would jointly convene a group of friendly supplier countries… to pursue such measures as would restore fuel supply to India.”

American and Indian negotiators also stalled over India’s claim over the “spent fuel” from India’s civilian reactors. While spent fuel is nuclear waste that can no longer sustain the reactions required to create energy, it can also be reprocessed to continue the energy nuclear cycle or even as weapons-grade fissile material. Of course, with less ability to monitor and safeguard the use of spent fuel, the US negotiators were unwilling to allow India to reprocess the nuclear waste generated from its reactors. Through negotiations, India’s access to spent fuel has been agreed upon with the limitation that reprocessing must occur in a facility under IAEA safeguards, a crucial element of India’s nuclear program.

The third barrier has been the various domestic constituencies in the US and India. In the US, nonproliferation experts have questioned the decision not to include India’s breeder reactors in the safeguard scheme. They argue that the deal should demand permanent safeguards on India’s reactors; in case the deal were to end, India should not resume its nuclear program. Second, they question the feasibility of IAEA safeguards to guarantee that nuclear technologies are not being transferred between India’s military and civilian programs. While on paper the separation implies that nuclear technologies, raw materials, or even energy would not be shared between the two programs, experts argue that in a high-information, technological industry, an ideal firewall would also have to separate nuclear researchers, blueprints, conference presentations, and highly sensitive information between the nuclear programs.

Indian detractors have emerged from different perspectives with robust criticisms. India’s nuclear hawks argue that the deal is detrimental to India’s nuclear sovereignty, due to the strict testing and fissile material production limits as established by the 123 agreement. Mainly from the right-of-centre BJP party, these hawks argue that the deal has taken away India’s sovereign right to conduct further nuclear tests, a suspicion furthered by the deal’s stipulation that India will revisit its stance on the fissile material cut-off treaty. Further, the right wing in India has argued that the deal has not really included India in the international nuclear regime, falling short of granting India full nuclear status. Conversely, India’s leftist parties argued that the deal has brought India too close to the Americans, “adversely affect[ing] our independent foreign policy and our strategic autonomy,” as Communist leader Prakash Karat stated in 2006. Later, the deal was stalled because of accusations that the Congress coalition was bribing members of parliament to vote with the government resolution. Despite these setbacks, with the support of BJP members of parliament, the resolution was passed in April 2008. With the 123 deal passed in both legislatures, it was formally signed by Secretary of State Condoleezza Rice and the Indian external affairs minister in early October 2008.

The Meaning of the Deal for Nonproliferation and Disarmament

Noting that disarmament and nonproliferation are often seen as mutually reinforcing goals, Robert Ayson argues that these two objectives actually have different fundamental assumptions. He argues that an “abolition strategy” of nuclear control, which assumes that nonproliferation is a first step towards disarmament, is undermined by “management strategies” that place an emphasis on arms control agreements. The two strategies paradoxically undercut each other’s legitimacy and effectiveness; one assumes nuclear weapons are an unavoidable part of international relations, while the other aims to rid the system of the threats associated with their presence.

The 123 agreement inherently assumes a management strategy of nuclear control. The agreement’s successes depend on the limitations it places on India’s ability to proliferate in the future, while compromising any hope of future disarmament because of the tacit admission the deal and its subsequent IAEA and Nuclear Suppliers Group exemptions give to India’s military program. Pakistani officials note that “India’s ‘willingness’ to identify and separate its civilian and military nuclear facilities” is tantamount to the “IAEA-BOG recognizing and accepting India’s nuclear weapons status.” The establishment of this new status quo for India—tacit admission of its program-constitutes the larger concern for policymakers. Just as the nonproliferation treaty has encoded nuclear weapons status for the permanent-five states, with the India-specific exemptions in the IAEA and Nuclear Suppliers Group, India’s program becomes normalized within the regime. With this change, it becomes less likely that the international community can continue to demand India’s disarmament. Ironically, a deal on nuclear energy both legitimizes India’s weapons program while consequently protecting it from disarmament.

Nonetheless, given India’s nuclear ownership, the deal does make major gains in areas of nonproliferation. The directors of the Arms Control Association in Washington, the Citizens’ Nuclear Information Centre in Tokyo, and the Rideau Institute on International Affairs in Ottawa, along with 160 endorsements, challenged the firewall and safeguards system in a letter to the chair of the Nuclear Suppliers Group before its landmark decision in August 2008. In particular, these nonproliferation experts found fault with the negotiated premises that India maintains the power to choose which sites will be subject to inspections, and has chosen to place only 65 percent of its program under safeguards. The reactors of most concern to the international community—India’s breeder and weapons facilities—will not be subject to inspections. To satisfy its domestic critics, India’s Department of Atomic Energy reinforces this perception, stating that the “overarching criterion would be a judgement whether subjecting a facility to IAEA safeguards would impact adversely on India’s national security.” Yet there have been numerous defences of this stipulation within the agreement. For example, Mohamed El Baradei, former head of the IAEA, recognizes that currently there are no Indian facilities subject to inspections, and therefore, he argues partial Indian acquiescence to IAEA safeguards is a step in the right direction. Countering the claims of many detractors, El Baradei stated in an address to the IAEA-BOG:

The India Safeguards Agreement could have, if properly implemented, a lot of positive implications, development implications, security implications, non-proliferation implications, and arms control implications. I have been supporting the agreement from day one.

El Baradei and the nonproliferation groups use differing matrices to measure the positive effects of the 123 agreement. While it is true that only 65 percent of India’s reactors will be safeguarded, nonproliferation activists see anything short of 100 percent accession as relative failure. Comparatively, supporters of the deal see the 65 percent as a show of good faith, recognizing India’s commitments to shutting down the Canadian CIRUS reactor and moving France’s APSARA reactor to a safeguarded zone. The deal also stipulates that any reactors built in India from the time of the agreement will be placed under the firewall-safeguards regime, meaning that eventually a higher portion of India’s reactors will fall under the safeguards scheme. Further, the effects of the safeguards on these nuclear reactors dictate that no new technology or materials offered through the deal will be used for the Indian weapons program. Without the deal, India would have had complete control over its both civilian and military reactors, while the 123 agreement commands at least partial Indian acquiescence to the nonproliferation regime.

William Potter takes a different perspective in his analysis, stating that it was the timing of the agreement’s announcement that did the most damage to the nonproliferation regime. He states, “the timing of the Joint Statement, coming on the heels of the disappointing and largely unproductive 2005 NPT Review Conference, will be perceived by many states as further evidence that the US cannot be counted on to honour its non-proliferation obligations.” Yet Potter’s argument citing the failures of the 2005 nonproliferation conference is reliant on circular logic. One of the reasons that it conference “failed” was because of its inability to bring India, Pakistan, and Israel into the nonproliferation fold. The 123 agreement attempts to do just that, bringing India closer to the regime and creating a nonproliferation standard for “outsider” states to emulate for future review conferences. Similarly, TV Paul and Mahesh Shankar make the case that more damage is done to the NPT regime with India outside the framework, arguing that sanctions against India “for over 30 years have only reinforced India’s opposition to the non-proliferation regime and led it to openly challenge its legitimacy.” Simply put, having a state of India’s magnitude outside the regime does more damage than benefit.

In cost-benefit terms, the 123 deal has used its stipulations to limit India’s illegal nuclear gains by raising the cost of future Indian proliferation. The financial gains attained through the deal, India’s new normative status within the nuclear regime, the dependence of its nuclear energy program on external trade, and any post-test economic sanctions would carry a devastatingly high cost were India to renege on the deal. Therefore, India will not be interested in weapons proliferation beyond its current program, as the costs of nuclear proliferation are too high, and India has been able to effectively establish, within the international community, a new status quo for its (still illegal) weapons program.

At a more technical level, the 123 agreement supports nonproliferation because it limits both the quality and quantity of India’s fissile material production, while still allowing India a minimum credible deterrent against its nuclear neighbours. Under the terms of the deal, given its technological capabilities, India will only be able to produce “first-generation” nuclear material, yet will be restricted from proliferating thermonuclear-grade fissile material as it has accepted a voluntary moratorium on testing. This limits the destructive scope of India’s nuclear weaponry, as most of its current stock is believed to be first generation. In this same vein, at the diplomatic level, the US struck a near-coup as India has also agreed to take into consideration a review of its informal support for the fissile material cut-off treaty. As these concessions are central for the international nonproliferation regime, and India has voluntarily abided by both since its 1998 tests, the formalization of these objectives is crucial for the regime.

Further, the deal looks to match the nuclear regime with the power realities of the current international environment. In one of the strongest criticisms lobbed against the 123 agreement, Pakistan argues that it sends the wrong message to other states, suggesting that nuclear persistence will eventually lead to nuclear compromise. But the suggestion that India’s deal would set a precedent for other states attempting nuclear proliferation does not take into account the global realities that contextualize this deal. States such as Pakistan, Iran, and North Korea have not demonstrated similar nuclear responsibility, economic and infrastructure stability, and commitment to global security, and therefore should not and would not receive the same benefits as India under similar agreements. Because of India’s commitment to a non-first-use clause, export and trade controls, and unilateral moratorium on fissile material tests, supporters argue that India’s exclusion from the nonproliferation regime has been unnecessary, as it has been an exemplary non-member in its nuclear responsibilities. It is not until these states-Pakistan, Iran, and North Korea—establish internal stability, nuclear responsibility, and economic growth that they would be considered for similar nuclear deals, thereby limiting the precedent-setting reach of the 123 agreement.

Engaging India

Thus far, this article has argued that the India-US nuclear deal has in fact furthered the objectives of nonproliferation within the international system, particularly because the omission of states like India weakens the nonproliferation regime and makes it ineffective. Therefore, it is in Canada’s interest to pursue a deal with India, for three reasons. First, a Canada-India nuclear deal not only puts Canada in a position both to sell reliable nuclear technology to India’s infant civilian program and to offer India a safe source of nuclear raw materials, but sets a foundation for improved economic relations between the two states. Second, a deal with India would give Canada a stronger footing in negotiations at the international nuclear table, a position weakened by previous years of Canadian nuclear policy. Third, India’s growing role in international politics is key to Canada’s success in current international engagements. A Canada-India civilian nuclear transfer deal would send the right signals to New Delhi that Canada is interested in furthering the relationship in the realm of security. A nuclear deal between these countries would not just be an end in itself, but rather a means towards improved relations between India and Canada.

Economic Benefits

Prime Minister Paul Martin’s international policy statement laid out as a goal of Canadian foreign policy further engagement with the BRIC countries, specifically, economic engagement with India and China. Instead of India vying for Canada’s technical expertise, foreign investment, and economic cooperation, India’s new stature suggests that Canada now needs to begin catering to India’s growing market. India’s boom has proved to be resilient and long term, forcing many states, even the US and China, to reconsider their previous (negative) Cold War relationships with India.

The challenged Canada-India economic relationship can be measured in a number of ways. In 2006, India was Canada’s 14th largest export partner, yet Canada represented only 1.2 percent of India’s yearly exports and 0.9 percent of its imports. In 2007, Canadian exports to India totalled $1.7 billion, only 0.4 percent of its total world exports. Imports from India faired only slightly better, at 0.5 percent of Canada’s total imports. Even now, at number 28, Canada remains at the bottom of the list of India’s major trade partners, far behind countries such as Germany and Australia. Until the recent initiatives to improve the bilateral relationship began in January 2009, one of the major challenges was that Canada pursued its bilateral Indian relationship on its own terms, offering insubstantial areas for cooperation. Until now, Canada’s engagement with India has only focused on small-scale and non-essential relations.

There is little question that the strength and consistent growth of India’s economy have attracted states that hope to capitalize on India’s 300-million-person, middle-class, English-capable, and information-techonology-focused labour force. Starting with a high-level trade mission in March 2007 to expand small- and medium-business trade between the two countries, major initiatives have been pursued with the opening of Canada-India relations. Harper visited India for the first time in November 2009, a year that saw three other ministerial visits. Ushering in what the Canada-India Business Council calls “a new era of trade,” the January 2009 trip by Stockwell Day, Tony Clement, and Gary Lunn centred around Canada’s interest in a nucleartransfer deal, free trade, and an investment protection program between the states. In Ottawa on a recent trip, India’s minister of commerce, Rahul Khullar, responded in kind: “you’ll see us coming back [to Canada] to get this going.”

To a large extent, these major positive engagements credit Canada’s decision to back India’s trade exceptions at the IAEA and the Nuclear Suppliers Group. Support for the Indian nuclear program has reaffirmed Canada’s interest in a partnership with India over nuclear energy. Before the deal was signed, Canada’s inconsistent position towards India was beginning to reap negative results. For example, just days after the Suppliers Group approved the India-specific waiver, India approached Australia for a uranium transfer deal to capitalize on its large uranium reserves. While Australia has rejected the possibility of nuclear transfers until India signs the nonproliferation treaty, the point is that Canada, even as the world’s largest uranium producer, was not India’s first point of engagement. Only when Australia rejected the Indian offer did Canada and South Africa become target markets for the Indian demand. Canada’s current posture ensures that it receives the economic benefits of investing in India’s nuclear program while ensuring a safe and responsible destination for its uranium exports.

Canada’s strategy requires an overlap of economic and security benefits in the area of nuclear raw materials. Nuclear power consists of 16 percent of world energy and with the growth of the nuclear market in India, plus ongoing projects in China, France, and Russia, experts suggest that the market for uranium has quickly become a seller’s market, potentially reaching 100 dollars per pound in the near future. Canada is the largest producer of uranium in the world, with an output of upwards of 28 percent of the global total and 80 percent of its mined uranium exported to the United States, Japan, and western Europe. Despite Canada’s wealth in natural resources, delays in formalizing a nuclear deal have meant that India’s first uranium transfers have been negotiated with the French firm Areva for 300 tonnes of uranium and the Russian firm TVEL for 2000 tonnes of nuclear fuel pellets. It has also near-completed deals with firms in Tajikistan and South Africa. Canadian firms, such as Saskatchewan’s Cameco, the world’s second largest uranium producer, have negotiated agreements with their Indian counterparts, yet will not be able to fulfil the terms of their agreements until the completion of the nuclear-transfer deal.

Even more important than the raw materials trade gained through a deal with India, Canada desperately needs a foreign market for its nuclear technology. India’s investment in its own nuclear program will reach the $100-billion range after the completion of its new reactors by 2020. With this money, the US will benefit from the India deal with immediate contracts worth several billion dollars, while Canadian projects have yet to take form. In September 2007, Atomic Energy Canada (AECL) announced that it was seeking the design of a nuclear reactor that uses a mix of heavy water and thorium, specifically to be marketed to India. Like other Canadian endeavours, AECLs project remains in the planning stages. AECL has a number of projects on hold in India, including a recently signed memorandum of understanding confirming AECLs supply of nuclear reactors to India. It has also met with various Indian companies interested in establishing nuclear power projects, including Anil Ambani’s Reliance Power Ltd. and Larsen & Turbot India.

Canada’s Position on Nuclear Proliferation

Middle-power states such as Canada also couple the objectives of disarmament and nonproliferation. For example, the Canadian government argues on its foreign policy website that the three pillars of the nonproliferation treaty are “equally important, inseparable and mutually reinforcing.” It continues to argue that the nonproliferation treaty stipulates that signatory states are “non-nuclear-weapon States (NNWS) [that] agree not to import, build or otherwise acquire nuclear weapons or other nuclear explosive devices. NWS are obliged not to transfer nuclear weapons or explosive devices to NNWS.” The exception created by the US-India nuclear deal effectively separates the objectives of nonproliferation and disarmament, contrary to current Canadian nuclear policy. This being said, a Canada-India nuclear deal is favourable as it provides Canada with a forum in which to propose ameliorations to the current US-India deal. A Canada-based deal should include a more inclusive safeguard scheme, the addition of more robust safety aspects, and a stricter firewall between India’s civilian and military programs, placing restrictions on information and technology transfers between Canadian and Indian nuclear scientists.

Beyond this benefit, there are two important effects of Canada’s decision to agree to a nuclear transfer with India at a policy level. First, inconsistency with the international nuclear consensus costs Canada an opportunity to be involved in negotiations at the international nuclear table. During negotiations of the 123 agreement in 2005, both India and the United States communicated the details of their negotiations to several key states, including China, Ireland, Australia, and some Scandinavian countries, ignoring Canada. Without a government-driven, internationally oriented response, Canada became a victim of its own inconsistent nuclear policy and risked losing its seat at the international nuclear table. Until January 2009, Canada had not adequately understood the implications of the nuclear agreement on strategic and security relations. Strategically, the deal has the potential to fundamentally alter the international nuclear nonproliferation regime, because it offers a tacit recognition of India’s legitimate nuclear power status. In a post-9/11 context, the US sees the larger threat to international security as the increasing accessibility of nuclear material in the hands of violent nonstate actors and rogue states.

Second, the deal also allows for less internal contradiction in Canada’s own nuclear policy. While Canada has wavered on its Indian nuclear relationship because India has not signed the nonproliferation treaty, it has actively pursued one with China, despite China’s numerous violations of the same agreement and its history of illegally exporting nuclear technologies to both Pakistan and North Korea. Examples of the Canada-China nuclear relationship are numerous, including the 2004 memorandun of understanding between AECL and the national nuclear safety administration of China, which will serve as an application review for building advanced CANDU reactors. This memorandum comes after previous successful engagements between Canada and China, such as the installation of two CANDU reactors in the Qinshan phase III site in Zhejiang province earlier in 2004.

There has also been a concern within the international nuclear community over China’s instrumental position on issues of nuclear safety and responsibility. During the Nuclear Suppliers Group negotiations of the 123 deal, China was a consistent detractor from the terms of the deal. It was not until hours before the negotiation deadline on 6 September that China, alongside Japan and Austria, approved the deal. Interestingly, in its closing statement to the nuclear cartel, Chinese delegates stated that China hoped that the Suppliers Group would now “equally address the aspirations of all (similar) parties.” On 8 September, two days after the India waiver was passed, President Asif Zardari of Pakistan announced a visit to China to negotiate Pakistan’s own civilian nuclear transfer deal. China has proposed the supply of nuclear technologies to help with Pakistan’s energy crisis, and the Times of India reported that within these negotiations, China committed to construct 10 new atomic power plants in Pakistan within the next decade. Therefore, Chinese acquiescence to the 123 deal is suggestive of Chinese regional power politics rather than real commitment to the nuclear nonproliferation regime. The focus here on Canada’s China policy is not to argue in favour of or against the Canada-China nuclear relationship, but to illustrate the inconsistency of Canadian nuclear policy.

Canada’s International Security Concerns and the India-Canada Relationship

The third argument presented by this article suggests that another benefit of the Canada-India nuclear deal moves beyond nuclear relations. Engaging India will be a benefit for Canada’s larger foreign policy objectives. Yet, more importantly to Canada, India’s growing role in international politics is central to the success of Canadian international engagements. A CanadaIndia civilian nuclear transfer deal would send the right signals to New Delhi that Canada is interested in furthering the relationship in the realm of security. For example, given its continued engagement in Afghanistan, Canada needs to move beyond a Pakistan perspective on the conflict, recognizing that India could prove to be a beneficial partner in combating the instability, insecurity, and insurgency within the state. Further, Pakistan’s recent political difficulties have cumulated in an inability to control its rogue militant groups and terrorist cells in the tribal areas bordering Afghanistan.

The Harper government has until now looked to Pakistan as a South Asian ally, yet with the build-up of insurgency in Pakistan, Canada has an interest in having India onside during the Afghanistan campaign. India has a similar desire to promote internal stability in both Afghanistan and Pakistan. Displaced persons, distrust of authority, poor economic conditions, conflict, and lack of opportunity in these states perpetuate insecurity for India. Insurgents from both states train terrorist groups that have attacked Indian posts and civilians in Kashmir. Consequently, Afghanistan is India’s second-largest aid recipient, just after Bhutan, with dozens of development projects across the country, including medical assistance, energy dam projects, vocational training, and road-building.

The congruence of security threats from Afghanistan towards India and NATO states is exemplified by the Indian embassy bombing in Jalalabad in early 2008. India’s role in Afghanistan is significant for three reasons: first, it has long-established relationships with anti-Taliban forces; second, it does not carry the baggage of “western imperialism”; and third, it has an active infrastructure and capacity-building presence. For these three reasons, a strengthened Indo- Canadian security partnership speaks not only to its nuclear relationship, but rather Canadian foreign policy interests writ large.


The India-US nuclear deal has had significantly larger effects than its bilateral implications would indicate, as it has essentially created a new paradigm for legitimate nuclear ownership in the international system. Similarly, a Canadian foreign policy shift towards a nuclear deal has the potential to jumpstart the Indo-Canadian relationship. India and Canada are mutually culpable for their weak relations. From the Canadian perspective, Canada must be significantly more aggressive in promoting a nuclear deal of “mutual benefit.” Nuclear cooperation, now with the blessing of the international nuclear regime, has both security and economic benefits for both parties. With Canada’s abundance in uranium natural resources and advanced nuclear technologies, it has a significant ability to benefit from India’s investment in its nuclear industry.

Canada needs to make itself attractive to India on issues that are not as superficial as its meagre offers in finance or trade, especially because Canada cannot offer major economic incentives to India, but has major security requirements in the region. Further, India’s “responsible” nuclear ownership also contrasts sharply with other players in South Asia, especially Pakistan’s unreliability as an ally, highlighted by its insurgency and the A. Q. Khan nuclear network. A nuclear deal would confirm Canada’s commitment to both the international nuclear regime and its new future relationship with India.