Following US, Russia aiming for more nuclear commerce with India

New Delhi (Platts)--3Nov2005

In the wake of the July 18 agreement between India and the US for future
nuclear cooperation, calling for compromises to exempt India from some
domestic and global nonproliferation restrictions, the Russian Federation is
likewise preparing to intensify nuclear cooperation with India, Indian and
Russian officials said.

Natwar Singh, India's minister for external affairs, met with Russian Foreign
Minister Sergei Lavrov in Moscow on Oct 28. According to an official statement
issued by the Indian government after the meeting, "the Russian side indicated
that cooperation between India and Russia could be expanded."

Diplomatic sources in Vienna said that officials from India's Department of
Atomic Energy (DAE) have discussed with counterparts from Russia's Federal
Atomic Energy Agency a roadmap for extending future nuclear commerce,
including more power reactor sales by Russian industry. A similar outline has
been sketched out for bilateral nuclear trade between the DAE and Canadian
industry, they said.

During a meeting of the Nuclear Suppliers Group (NSG) in Vienna two weeks ago,
Russia made a statement firmly backing the position taken at that meeting by
the US to grant an exception to India from NSG rules. Since 1992, these have
barred nuclear trade by the NSG's 35 members, which include Russia, with
states, including India, which are not parties to the Nuclear Nonproliferation
Treaty or which do not have full-scope IAEA safeguards in place.

Since 1992, during NSG meetings Russia has argued that a bilateral protocol
with India from the late 1980s over supply of VVERs should be fully
grandfathered, allowing Russian industry to sell power reactors to India
indefinitely. Other NSG members, including the US, have until now objected to
any further Russian sales beyond two units now under construction at
Kudankulam in Tamil Nadu state.

According to NSG sources, when the US announced this summer it favored
full-blown nuclear trade with India, the disagreement between Russia and other
NSG members over future Russian-Indian reactor sales had not been formally
resolved, and it was anticipated that Russia would renew efforts in the NSG to
obtain support for sale of more VVERs to India.

Indian and Russian officials said that future talks between the DAE and
Russian industry could result in a memorandum of understanding for sale of two
to four more VVER-1000s to India. The process may move forward, sources said,
when Indian Prime Minister Manmohan Singh visits Russia in early December.

When the Indian cabinet on Sep 22 approved sites for eight new reactors, that
plan expressly included room for two more 1,000-MW PWRs at Kudankulam and two
more at a new site in Maharashtra state.

According to diplomatic sources, during meetings in Moscow last week, Lavrov
urged Singh to support Russian efforts to delay reporting by the IAEA Board of
Governors of Iran's safeguards violations to the United Nations Security
Council. Both Russia and India are members of the IAEA board.

Sources said the prospect of bilateral nuclear commerce with Russian industry,
as well as desire for natural gas from Iran, may prompt India to support the
Russian position; however, India will remain under pressure from politicians
in the US to support US efforts to have the IAEA report Iran to the Security
Council. The text of the Indian communique on this point did not exclude the
possibility of a future Security Council referral: "On the Iran nuclear issue,
the two sides agreed that this matter should be discussed within the IAEA and
that the situation should not be allowed to escalate to a point where the
process of dialogue is stopped."

Sunil Saraf, New Delhi; Mark Hibbs, Bonn

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