Wednesday, 17 October, 2007

by Anne Davies in Washington and Craig Skehan
Sydney Morning Herald

AUSTRALIA'S plans to sell uranium to India appear certain to be scuttled after the Indian Government announced it was unlikely to sign a pact with the US on civil nuclear co-operation.

The US-India deal was a pre-condition to the planned sales of uranium because India is outside the nuclear non-proliferation treaty and Australia bans sale to non-signatories. The US-India civil nuclear agreement was considered by the Australian and US governments to include sufficient safeguards to allow sales to India to proceed.

The sales were likely to have been worth billions in export dollars because India plans to use nuclear energy to meet its burgeoning power needs.

The Indian Prime Minister, Manmohan Singh, has told the US President, George Bush, that "certain difficulties" would prevent India from moving forward on the pact for the foreseeable future.

The main obstacle is not the agreement itself but rather India's internal politics, including fears from the communist parties in the ruling coalition that India is moving too close to the US, officials and experts familiar with the deal said.

Besieged for two months by growing opposition to nuclear energy co-operation with the US, Mr Singh indicated over the weekend that he would rather save his government than the pact.

"What we have done with the US, it is an honourable deal, it is good for India, and it is good for the world," Mr Singh said. "But we are in the realm of politics, and within our coalition, there are differing perceptions."

The collapse of the deal is a blow to the Prime Minister, John Howard, who agreed to the sales in principle while in India last year, and to the Foreign Minister, Alexander Downer, who had trumpeted the plans.

In August a cabinet sub-committee approved the sales, and Mr Downer dismissed concerns about sales to a non-treaty country such as India.

Last night a spokesman for Mr Downer said the Government was aware of the reports. "We'll have to speak to the Indians and ask them what the situation is."

It is also a serious setback for Mr Bush, who has been pushing to improve relations with India as a part of his legacy.

But even in the US the deal was controversial.

Neither the US or India was eager to announce the setback. India's only official pronouncement was tucked at the bottom of a news release on the Indian embassy website outlining a telephone conversation on Monday between Mr Singh and Mr Bush.

The White House did not announce that the conversation had taken place until it had been asked about the Indian embassy statement.

A State Department spokesman said that the Administration still believed the deal was "a good one for the United States, for India and for the broader efforts at non-proliferation."