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Uranium From Australia For India: Can Madam Gillard Pull It Off? – Analysis

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By A. Vinod Kumar

That nuclear issue has been a sensitive factor in India-Australia relations was testified by Canberra’s antagonistic response to 1998 nuclear tests, when it recalled its high commissioner in Delhi. The animosity gradually gave way to goodwill when the John Howard government supported the India-specific waiver at the Nuclear Suppliers Group (NSG) in September 2008. However, Howard’s zeal to reinvigorate this relationship was interrupted when a domestic uproar forced him to revert on his plans to sell uranium to India. Things hardly improved as his successor, Kevin Rudd, consolidated a key policy decision of his Australian Labor Party (ALP) to not export uranium to countries which are not members of Nuclear Non-Proliferation Treaty (NPT).

Australia - India Relations
Australia - India Relations

The decision of Kevin’s successor, Julia Gillard, to reverse this policy not just indicates a dramatic shift in Australia’s strategic outlook, but also could endow a decisive fillip to its crisis-hit uranium industry. However, Prime Minister Gillard’s proposal on November 15 for a shift in the uranium export policy has triggered a major debate in the Australian politics, which remains divided on the issue.1 Daggers were instantly drawn as a major section of Leftists from her social-democratic party threatened to resist her proposal at the ALP Conference in December. Also, a key coalition partner, the Greens Party, said it could challenge this policy reversal.

However, unlike earlier times when a major section of political parties, other than the opposition Liberal-National Coalition, and industry groups like the Australian Uranium Association backed Rudd’s intransigence on non-proliferation principles, Gillard’s announcement has gained unprecedented support from centre-right groups in the Labor Party, provincial governments, industry associations and the media. Yet the stakes are high as the government itself functions on a slim majority, and might confront a situation similar to what the Manmohan Singh government faced while pushing for the Indo-US nuclear deal in 2008. The clincher here may be the changed geo-strategic environment and a globally pervasive economic crisis that is gripping advanced economies in quick succession. A host of domestic, economic and strategic factors could thus determine the prospective direction of this crucial Australian policy transformation.

A strategic shift?

Gillard’s recently published opinion piece has one central point – reversing the “different” treatment meted out to India, the world’s biggest democracy growing at 8 per cent per year and having “strong links of language, heritage and democratic values.” In what could apparently be an attempt to set the tone for the party conference, Gillard asks, if (our) policy allows us to export uranium to countries such as China, Japan and the United States, why is Australia not selling uranium to India for peaceful purposes? Thereby, Gillard affirms: “it is time for Labor to modernise our platform and enable us to strengthen our connection with dynamic, democratic India.” Touching upon the persisting non-proliferation sensitivities, Gillard asserts, to qualify for uranium trade India will be expected to follow the same standards as other countries, namely “strict adherence to International Atomic Energy Agency (IAEA) arrangements and strong bilateral undertakings and transparency measures that will provide assurances our uranium will be used only for peaceful purposes.”

India’s status as a non-NPT state has long been the hindrance for Australia to trade uranium with a country poised for massive nuclear energy expansion to power its economic growth. While the Leftists and Greens hold on to NPT as sacrosanct, prominent voices in the party including Resources Minister Martin Ferguson terms the existing policy towards India as outdated and “a hangover from the 1970s.” Others like Defence Minister Stephen Smith feels India’s safeguards agreement with the IAEA and NSG waiver makes its sufficiently possible to overlook the NPT factor in initiating uranium trade with India. Opponents to the sale though harp on trivia, with the Greens leader Bob Brown affirming that Australian uranium will somehow find its way into the Indian weapons programme. A few others feel that giving uranium to India will aggravate the nuclear arms race with Pakistan. Gillard attempts to seal these inconsiderate debates by stressing that the policy shift will apply only to India owing to its new safeguards agreement and NSG exemption. In the same breath, she clarifies that Pakistan or Israel will not get this benefit, despite waiving the NPT rider, as “India is in a class of its own.”

Such logical justifications notwithstanding, the shift is invariably marked by strategic gumption and economic prudence, which Gillard neatly articulates: “we must understand the opportunities and challenges of this Asian century, to focus on our long-term economic goals and to confront difficult questions about maximising prosperity.”

The economic spin-off

Australia’s uranium industry is striving to unshackle itself from self-defeating restrictions that enabled others like Kazakhstan and Canada to exploit the fledging uranium market. Though Australia has uranium deposits that could account for nearly 40 per cent of global reserves, it currently garners a mere 13 per cent of the global market share.2 The desperation to increase its share is only half the story. A real concern would be to insulate from the potential social backlash of the impending global economic crisis. In Gillard’s words, “as in other areas, broadening our markets will increase jobs.”

Needless to say, Australia’s uranium industry is itself in doldrums. Production has sharply fallen from its peak average of over 10,000 tonnes to around 7,000 the last fiscal year, thus derailing plans to increase output to over 14,000 tonnes worth around $1.7 billion. A Reuters report points out that following the Fukushima disaster, global uranium rates plummeted to $55 from a peak of $136 in 2007. This meant that from estimates of over $1 billion, Australia struggled with just over $600 million in uranium sales. Adding to the woes were the regulations on uranium mining under the Environmental Protection and Biodiversity Conservation Act curtailing expansion of mining sites, currently restricted to four major mines. In recent years, following the Rudd government’s decision to end a 25-year policy ban on new mines, provisional governments in South and Western Australia and the Northern Territory approved mining expansion, most notably the Olympic Dam project, the world’s biggest uranium facility with capacity of over 19,000 tonnes.

Incidentally, the provincial governments have backed Gillard’s proposal to allow uranium exports to India. Even the Australian Uranium Association is upbeat, terming it as confidence-boosting. Incidentally, the Association had supported the Rudd government’s decision not to sell uranium to India in July 2007, stating that it “would not support any arrangements (sic) that undermines the world’s or Australia’s antiproliferation regime.” Also, the Minerals Council of Australia said in March 2006 that local companies were not about to damage their integrity by selling uranium to a nation that had not signed the NPT.3 Those were glorious years of Australian domination of global uranium industry, when they felt Indian uranium requirements were too meagre to be excited about. Also, the pro-capitalist Liberal Party was then at the helm.

Domestic undercurrents

Scenarios changed ever since the Labor Party took charge and pushed forward anti-industry legislations including the carbon tax, largely owing to pressure from the Greens and environmental groups. The industry’s optimism has not been constant as the Carbon Tax was debated with much acrimony, including personal attacks against Gillard and attributing Rudd’s fall to his climate change policies. In fact, such policies attain huge political overtones, and also expose the contradictions in Australia’s energy politics.

Though a country with the biggest uranium reserves, it has yet to venture into nuclear energy. Consequently, non-proliferation and climate change policies are driven by idealist flavour in the political discourse. Even the Greens Party have a paradoxical position on the issue. It opposes uranium mining citing environmental concerns and backs a carbon tax on polluting industries, but hardly pushes for nuclear energy as a clean fuel option. In fact, the Prime Minister’s Task Force recommended in December 2006 that the only driver for nuclear power in Australia is reduction of CO2 emissions, adding that nuclear power would be 20-50 per cent more expensive, and could only be competitive if ‘low to moderate’ costs are imposed on carbon emissions. The carbon tax might have been its policy outcome. The report had also recommended setting up of 25 power reactors in 15 years time. The industry had backed a proposal for 10 reactors by 2030.

This being the milieu, a heated debate on Gillard’s proposal is imminent at the party conference. That the leftists control about 44 per cent of votes at the conference would force Gillard to heavily rely on the centrist-rightists to carry the policy forward. Analysts opine that a decision to open uranium sales will not need a legislative approval. However, considering the government’s meagre four vote majority, and that the Greens could be a spoiler, its political costs will be hard to ignore. Gillard though could take comfort in the opposition Liberal’s support for her proposal and its smooth passage.

The final steps

It is however likely that even Prime Minister Gillard’s supporters in the Party might insist on stringent riders including an Indian commitment on nuclear test ban, which may be impractical and difficult to implement as was in the case of NPT. In bilateral agreements, Australia generally insists on its consent for transfers to third parties, high enrichment and reprocessing. Though India’s safeguards arrangement with the IAEA will provide the assurance framework, one cannot rule out Australia insisting on fallback safeguards so as to execute its oversight through the Australian Safeguards and Non-Proliferation Office (ASNO), and to satiate domestic constituencies.

Assuming these issues could be negotiated, a major procedural stumble for Canberra is its membership in the South Pacific Nuclear Weapons Free Zone Treaty (Treaty of Rarotonga), which prohibits transfer of special fissionable material or equipment to any non-weapon state unless subjected to full-scope safeguards. How Australia manages to evade this obligation with the help of the new IAEA safeguards and NSG waiver could be the template for willing nations in other nuclear-weapons-free zones, especially in Africa, to initiate nuclear trade with India.

1. Julia Gillard, “An opportunity for sound and fury signifying something”, The Sydney Morning Herald, November 15, 2011.
2. Some estimates put it as 19 per cent of the global share. Similarly, the World Nuclear Association attributes the Australian uranium reserves to 31 per cent as per 2008 data.
3. Quoted in Jim Green and Sara Franzoni, “Uranium, India and the Nuclear Non-Proliferation Regime”, Energy Science, Briefing Paper 18, at http://www.energyscience.org.au/BP18%20India.pdf.

 

Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomment/UraniumfromDownUnderCanMadamGillardPullitoff_avkumar_211111

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Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA)

The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), is a non-partisan, autonomous body dedicated to objective research and policy relevant studies on all aspects of defence and security. Its mission is to promote national and international security through the generation and dissemination of knowledge on defence and security-related issues. The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA) was formerly named The Institute for Defence Studies and Analyses (IDSA).

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