India Risks Upsetting Either Russia Or US And France New Delhi: As India prepares to sign a key agreement with Russia on two new Kudankulam reactors (KK-3 and 4), the Prime Minister’s Office has highlighted a fundamental problem with the thorny issue of nuclear liability which not only threatens the future of India’s civil nuclear sector but also India’s relations with key partners like Russia, US and France. The government aims to sign the techno-commercial agreement with Russia during the forthcoming visit of Russian President Vladimir Putin in October. The Cabinet Committee on Security (CCS) is scheduled to clear the agreement in the coming weeks. The PMO has asked the law ministry for a legal opinion on the thorny issue of whether the 2010 nuclear liability law passed by Parliament should apply to the new Russian reactors. Under the right to recourse in the law, the operator (NPCIL) can pass on the costs of compensation (in case of a nuclear accident) to suppliers if faulty equipment is found to have caused the damage. This is a key feature of the liability law that has had foreign suppliers and Indian private sector in arms against the government. Its for this reason that the law is deemed incompatible with an international convention India wants to accede to. The government is faced with two choices — if it applies the liability law to the new Russian agreement, Moscow will protest, and it will go against a central tenet of India’s policy. But if it applies the waiver to Russia, it could come under pressure from other suppliers, which would render the liability law as it currently stands, useless. The intergovernmental deal between India and Russia (2008) said no retroactive application of domestic law would apply to the agreement — that was interpreted to mean that the liability law would not apply to Kudankulam 1 & 2 power plants. India absorbed the liability leaving Russia free. The Russian government has said the same deal should apply to KK-3 and 4 reactors. The clause in the Kudankulam agreement was put there by India because of bad history. In the 1970s, the Pokhran tests triggered a round of sanctions against India by some countries. In 1978, the Carter government passed the NNPA, which unilaterally abrogated the Tarapur deal, causing a historic low in Indo-US ties. From then, the Indian stand was that international agreements should triumph over retroactive application of domestic law. This was maintained by New Delhi through the negotiations on the nuclear deal. Therefore, when Russia insisted on the extension of the 2008 agreement on newer Kudankulam reactors, the department of atomic energy agreed. But this, as the PM has observed, is tantamount to giving Russia a special status, because it is believed to go against the principle of “universal application of law”. It could open the government to litigation from domestic suppliers who don’t enjoy such a waiver. More important, it leaves India vulnerable to rupture of ties with US and France. The French nuclear giant Areva is committed to building six reactors at Jaitapur but has been battling the liability lawand the lack of a level playing field would go down badly in US and France.