Thursday, 23 August, 2007

The Economist

The deputy sheriff does his bit for America's nuclear deal with India

WHAT Australia's outback deserts lack in water they make up for in uranium. They contain almost 40% of the world's known low-cost reserves of the nuclear fuel. It is big business for Australia: exploration companies are at present spending ten times more money searching for deposits than they did three years ago. And ore from Australia's three operating mines supplies about a quarter of the world's uranium-oxide exports. Until now all this has gone to countries that have signed the Nuclear Non-Proliferation Treaty (NPT). This ensures, in theory, that they will use it to produce electricity rather than bombs. But on August 16th John Howard, Australia's prime minister, said he would lift a ban on selling uranium to India, which refuses to sign the NPT, has tested nuclear weapons and does not rule out testing more.

Mr Howard says the sales will be subject to “strict conditions”. India will first have to sign a safeguards agreement with Australia, guaranteeing that none of its uranium will be diverted to weapons. As part of an agreement with America (see article), it is also to submit to inspection by the International Atomic Energy Agency of some of its civil nuclear reactors. Yet environmentalists have accused the government of spoiling Australia's strong record on nuclear non-proliferation.

Australia's safeguards regime was drawn up in the late 1970s when a former conservative government agreed to open up newly discovered uranium deposits in the Northern Territory for mining and export. America, Japan and South Korea are among Australia's biggest customers.

Mr Howard first flagged the change of Australia's nuclear policy during a visit to New Delhi in early 2006. In part, he was echoing America's earlier decision to overturn a 30-year ban on sharing civilian nuclear technology with India: as one of America's closest allies, Australia is well placed to help India fuel its expanding nuclear-energy needs. But Australia is also keen to build a solid regional relationship with India similar to those it already has with Japan and China. Relations with India soured after Australia strongly criticised its nuclear weapons test in 1998.

Mr Howard also wants to bolster his credentials as a promoter of clean (read nuclear) energy. Uranium mining has always divided Australians, but more seem to be leaning towards an expansion of the industry in response to global warming. The opposition Labor Party only recently dropped its policy of limiting mining to the three working mines. Labor still says it will ban any uranium sales to India if it wins an election due at the end of this year, as opinion polls suggest it might.

Other doubts linger over the deal, notably the fate of the America-India agreement itself. It also needs approval from the 45-nation Nuclear Suppliers Group. If it survives all that, argues Rory Medcalf of the Lowy Institute, a Sydney think-tank, Australia should see the deal as an opportunity: to use its clout as a uranium supplier to build strong anti-proliferation safeguards outside the “imperfect instrument” of the NPT. Should India test another bomb, public outrage, he reckons, would kill uranium exports in a flash.