PM’S volte-face on nuke deal lets India down

PM’S volte-face on nuke deal lets India down

For two years, Prime Minister Manmohan Singh, a self-proclaimed “politician by accident", invested the little political capital he had into reaching an accord on civilian nuclear-energy cooperation with the US.

Once the Oxford-trained economist had procured an agreement in August, after tough negotiations with George W. Bush’s administration, it seemed he was close to victory.

When his Marxist backers, who keep the government in power, said the deal was a sellout, the mild-mannered Prime Minister dared them to withdraw their support. “I will let posterity judge the value of what we have done," he said in Parliament.

That was two months ago. Last week, Singh changed his tune. “I do attach importance to seeing this deal through, but if the deal is not through, it is not the end of life," he said at a conference in New Delhi.

What that comment means, according to political analysts as well as opposition parties, is that Singh is throwing in the towel on the nuclear accord to save his government. His coalition partners don’t want him to force an early election. Polls are due in 2009, and which politician wants to give up political power for the sake of nuclear power?

One such important ally, Dravida Munnetra Kazhagam leader Muthuvel Karunanidhi, the chief minister of Tamil Nadu, went ahead and congratulated the Prime Minister for “gladdening the hearts of people" by patching up with the Left-wing parties.

“Frankly, the deal is not important," he told the NDTV news channel. “The government is important."

Unless Singh has staged a tactical retreat to take the Marxists by surprise in a later offensive, the so-called 123 Agreement with the US is now dead.

The Union government will now meekly accept the demand of Communist Party of India (Marxist) general secretary Prakash Karat and delay negotiating safeguards forits nuclear facilities with the International Atomic Energy Agency.

That was one of the three remaining steps in implementing the accord. After the Nuclear Suppliers Group had been persuaded to resume trade with India and the US Congress had approved the deal, India would have been able to import enriched uranium and reactors.

None of that may happen now. And that’s really a shame.

A lack of electric power is the biggest hurdle to sustaining 9% economic growth in the world’s second most populous nation. India’s atomic power programme, which accounts for only 3% of the country’s energy production, has been stunted by an international embargo ever since the government tested a nuclear weapon in 1974.

Singh’s unexpected U-turn on the nuclear deal greatly diminishes the possibility of early elections in the country, though at the cost of punching a big hole in the government’s credibility.

In the three years that it has been in power, the Union government has spent money on such ill-conceived programmes as guaranteeing 100 days of work for each village household. The rural job guarantee has been an avenue for corruption and has created little in the way of durable assets.

Singh’s ministers have also tried—so far unsuccessfully, thanks to the judiciary—to set aside seats in an already restrictive higher education system through caste-basedquotas.

At the same time, Singh’s government has accomplished next to nothing in areas where it had much to do.

The communists aren’t amenable to the idea of government paring its stake in state-run banks. So that plan, which would have made the Indian banking system more competitive, has been put on the back-burner.

A proposal to modernize the pension industry has met with a similar fate. The urgent task of amending the country’s ultra-restrictive employment laws, which are impeding the growth of labour-intensive industries, hasn’t even been attempted by the government. It is also hesitant to loosen controls on foreign investment in retail, because the Communists are opposed to it.

Any chance that Singh’s government would make up for lost time in pursuing the stalled economic agenda has been squandered now that the Marxists have gotten their way on the nuclear deal.

From now on, populism will reign: Next year, 5.5 million government servants will probably be given a hefty payincrease.

Capital inflows into India are too strong at the moment for any of this to have immediate consequences. The Sensex, the benchmark equity index, rose 3.5% on Monday to a record. Only when the tide of liquidity turns will the cost of Singh’s surrender begin to rankle.