Deepening ties

oz pm abbot visit

Trade partners have again started evincing interest in India with promise of substantial business in the form of trade, investment, co-production etc.

Australian Prime Minister Tony Abbott made his first official visit to India from September 4 to 6 to further strengthen the strategic partnership and promote trade and investment co-operation between the two countries. In the changing international context in which newly emerging powers are threatening the established international order, a series of realignment of power relations amongst nations in the Asia-Pacific region is taking place. As a result, one sees a flurry of visits of leaders to each other countries to engage in talks how to manage this new situation without destabilising the established order. Tony Abbot’s India visit may be seen in this context as another move in that direction.

As was expected, the biggest achievement was the big-ticket item of signing the civil nuclear deal. India thus secured another endorsement for its status as a peaceful nuclear power. The issue of uranium export to nuclear-armed India had remained a contentious one for quite some time with opinions sharply divided in Australia. Non-proliferation concerns also governed negotiations between the two countries, but both subsequently agreed to the non-proliferation commitments made by India, which includes India quarantining its civilian nuclear power sector from its weapons programme.

Negotiations surrounding arrangements for the export of uranium continued and were completed before Abbott undertook his journey to India. India convinced Australia that uranium would not be used for nuclear weapons and Australia was assured of India’s commitment to peaceful power generation. In his address in Mumbai, Abbott admitted India’s “impeccable non-proliferation record” and hailed India as “a model international citizen”. This deal made Australia one of India’s top strategic partners.
Though India has signed nuclear supply agreements with countries like Canada, Kazakhstan and Argentina, Australia was a much sought after source because of the quality of its uranium. Australia’s previous Labour government moved to lift the ban on selling uranium to India in 2011 in a bid to strengthen relations with the fast-growing economic powerhouse. The negotiations for a nuclear safeguards agreement started when Australian PM Julia Gillard visited India in October 2012. At that time, Australia stressed that any export would have to be accompanied by guarantees that uranium would only be used for power facilities and not for military purposes.

The Labour government previously opposed selling uranium to India on the basis that India was not a signatory to the nuclear non-proliferation treaty. This remained a long barrier to any trade deal but was overturned. Australia holds about a third of the world's recoverable uranium resources and exports nearly 7,000 tonnes a year.

Uranium sale
The Greens Party, however, is not happy with the Abbott government’s decision on uranium sale. According to Greens senator Scott Ludlam, India’s nuclear industry had been “plagued with accidents and near-misses at reactor sites”. He further argued that Australia would be directly complicit in fuelling the nuclear arms race between India and Pakistan and suggested instead that Australian industry should be partnering with India’s vibrant solar sector.

Interestingly, while Australia signed the uranium export deal with India for peaceful power generation, its exports of nuclear fuel to Russia have been banned. Australia’s official end to the uranium trade with Russia was a part of trade sanctions triggered by Russian military intervention in Ukraine. Australia felt that Russia violated international law and therefore justified its ban, though the Greens had always argued that the deal had always been a mistake. In fact, though a previous government struck a trade deal with Russia, only a single shipment was made in 2012, five years after an initial trade agreement was reached between Moscow and Canberra. The agreement with India is expected to double overall exports to a billion dollars annually by 2018.

Currently, India is heavily dependent on coal for generating power and has 20-odd small nuclear plants with plans for more. Australia has a great role to play in meeting India’s energy demand. Besides supplying coal and jointly mining in India, the nuclear deal will help India ramping up its plans to expand nuclear energy and help mitigate from its crippling power shortages. Despite the hue and cry that anti-nuclear lobbyists continue to make, nuclear as a source of energy accounts for less than 2 per cent of the India’s total energy needs. If adequate safety measures are adopted to prevent a nuclear accident, there is no reason why India should not pursue using nuclear as a source of energy as it is clean, reliable and cost-effective. India continues to struggle to produce enough power to meet the rising demand - according to a recent World Bank report, nearly 400 million people still have no access to electricity while crippling power cuts are common even in big cities. Expanding the nuclear power base would mitigate some of these woes and reduce dependency on coal, hydroelectricity and other sources of power.
        
Both India and Australia are already strategic partners with growing economic and trade ties. India is Australia’s fifth largest export market with total exports of $10.7 billion (A$11.4 billion). The total bilateral trade is worth around $15 billion and both countries have the aim to substantially increase this figure. Though it would look miniscule as compared to Australia’s trade ties with China (more than $150 billion) and Japan, for example, yet it is substantial as Indian economy bounces back to the path of economic growth after a temporary hiccup during which a series of scams and policy paralysis hit the government. The revamping of growth strategy of the Modi government has revived hope and New Delhi’s trade partners have again started evincing interest in India with promise of substantial business in the form of trade, investment, co-production, technical collaboration, etc.