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Australia Likely to Review Ban on Uranium Sales to India

Rajaram Panda was Senior Fellow at the Institute for Defence Studies and Analyses, New Delhi. Click here for profile
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  • July 06, 2011

    The post-Fukushima debate about the viability of nuclear energy has not adversely impacted on India’s nuclear power programme. India’s growing demand for energy does not allow it to abandon nuclear power production as a source of clean energy. Efforts are, however, on to diversify the sources of energy with a focus on renewable energy. A compelling argument can be made to pursue nuclear power production as a source of clean energy, keeping in mind climate change and environmental issues. It is in the light of this that the controversial ban on uranium export by Australia to India needs to be assessed.

    Australia controls the world’s largest known reserves of uranium, and is the third largest producer of uranium. India has been lobbying the Australian Government to remove its ban on uranium sales. The issue of uranium sales from Australia to India has run through arguments and counter-arguments. Within Australia, there are divergent views regarding the ban on uranium sales. Australia had initially taken the stance that it will not supply uranium to non-NPT countries for use in nuclear power programmes. But former Prime Minister John Howard ended this ban arguing that a uranium deal with India was in Australia’s interest. As part of this deal, Australian nuclear inspectors were allowed to check and verify whether uranium was being used only for peaceful purposes. However, the earlier ban was re-imposed when the Labour Government first led by Kevin Rudd came to power.

    Australia’s ban on the sale of uranium to India is likely to hinder the goal of building a strategic partnership and exploring complementarities in the defence and maritime domain between the two countries. It is probably for this reason that there are signs of a rethink in the Gillard Government about reviewing Australia’s uranium sales policy. Indeed, Australia’s uranium sales ban to India is the biggest stumbling block in their energy ties. The rethinking in Australia is probably based on the conviction that India has an impeccable non-proliferation track record and that a reversal in its policy would sooth Indian sentiment hurt by the alleged racial attacks on its students in Australia.

    In February 2011, Australia’s Resources and Energy Minister Martin Ferguson publicly called upon the government to amend its policy on the export of domestically mined uranium to India. While clarifying that he is not recommending that Canberra allow uranium sales to every nation that has not signed the NPT, Ferguson said that the Labour Party should show “flexibility and discretion” on the matter and acknowledge New Delhi’s “very, very good history of nuclear non-proliferation”. Admitting that the prohibition on uranium sales is a thorn in relations between Canberra and New Delhi, Ferguson said, “no one can suggest India is a rogue state” and, therefore, Australia should be allowed to “handle the delicate situation of India while at the same time forcing full accountability in the use of uranium in civilian power plants.” 1 It was also revealed in a document released by Wikileaks that Ferguson had told the US Embassy officials that despite the current ban, a nuclear fuel deal with India could be sealed in the next three to five years.

    Ferguson’s public endorsement of a policy shift came on the eve of an expanded move by the influential right-wing Australian Workers’ Union to pass a resolution that supported an expansion of uranium mining.2 Though Ferguson’s support for uranium sales to India was a contentious issue within the Labour Party, some senior members of the party in the Gillard ministry endorsed his views. Ferguson emphasised that if the US can have a safeguard agreement allowing uranium and nuclear technology to India provided it allows some of its power plants to be opened to international inspectors, Australia can adopt a similar policy as well. Ferguson clarified that he was not against the Labour Party’s policy to “allow the export of uranium only to those countries which observe the nuclear non-proliferation treaty (NPT), are committed to non-proliferation policies, have ratified international and bilateral nuclear safeguards agreements and maintain strict safeguards and security controls over their nuclear power industries.” What he was seeking was the capacity to “assess the issue case by case”.

    While the Greens disagreed with an expansion of the uranium and nuclear industries and its spokesman Scott Ludlum charged the government with playing a “double game”, 3 the Opposition parties have advocated uranium sales to India, making this one of the few current policy issues on which the government could expect bipartisan support.

    The Labour Party will hold its national forum in December 2011. If the trends to review uranium sales are any indication, as articulated by Ferguson, the party leaders could approve a resolution that would give a one-off allowance to India or more broadly allow the Cabinet to offer such uranium export deals. In either case, the government would seek measures that would prevent exported uranium from being diverted for military purposes. Indeed, from the Australian perspective, uranium exports could be a key measure for strengthening security ties between India and Australia, particularly in the face of China’s expanding military reach. 4

    Meanwhile, the Gillard Government will have to take decisions affecting its relations with the US and India. The first decision would be to allow greater access for US military forces in northern Australia, which could ultimately lead to US ships being based in the country. Though the US has not completed its global force posture review, but following the setting up of joint group to provide inputs to the review process agreed at the Australia-US ministerial meeting in Sydney in November 2010, it has transpired that the US military presence will not diminish. On the contrary, its capabilities are likely to be extended.

    The other decision would be lifting the ban on selling uranium to India. Australia has noted that after the US signed a nuclear cooperation agreement with India and secured support for this from the Nuclear Suppliers Group, major nuclear nations have offered nuclear trade with India. If Labour’s attempt to change its policy at the national conference in December 2011 succeeds, it would demonstrate its “determination to make the leap to real strategic partnership with India”.5 Indeed, there is a realisation in Australia that its current position on uranium sales is a “huge road block to a real strategic partnership”.6 In the commercial realm, Australia sees India as its next China since Indian investments in the resources sector have started to make a “big difference”.

    Making a persuasive argument for lifting the ban on uranium sales to India, Rory Medcalf of the Lowy Institute and a former Australian diplomat in India, writes: “The uranium issue was almost resolved four years ago, when the Howard Government decided in principle to export. Now, sadly, it is the relationship’s barometer of trust. The leadership in Delhi thinks Australia is withholding uranium because we distrust India. India seems unwilling to invest in a real strategic partnership until that changes.”7 He further says that in view of India’s enhanced global profile, “Canberra’s full engagement with a rising India cannot be deferred forever.” 8

    From a larger security/strategic perspective, Australia envisions a larger US-India-Indonesia-Australia relationship so that it can manage successfully the growing power of China. Therefore, the significance of these two decisions against the backdrop of a rising China cannot be missed. Australia’s diplomacy seems to be maturing. The likely review of policy on uranium sales needs to be seen from this larger perspective.