Nuclear deal would allow AECL to renew Indian business ties

SHAWN MCCARTHY
Globe and Mail
November 14, 2008

OTTAWA — Federally owned AECL Ltd. is looking to re-enter the Indian market some 35 years after the south Asian giant shocked the world and brought about its own nuclear isolation by using Candu technology to build a bomb.

The federal government is currently negotiating a nuclear co-operation agreement with India that would allow AECL to re-establish business ties, despite concerns that India has not signed the international nuclear Non-Proliferation Treaty.

The negotiations come after Canada backed a decision by the international Nuclear Suppliers Group to provide an exemption for India that would allow it to develop civilian nuclear power even as it maintains its right to develop weapons without international scrutiny.

The United States lobbied hard to exempt India from the kinds of sanctions it imposes on Iran and North Korea, and has concluded its own nuclear co-operation agreement with India. France has also completed a nuclear co-operation agreement, and both countries are now openly competing with Russia to sell reactors there.

Critics complain that the West's special treatment of India will spark a new arms race with Pakistan and undermine the Non-Proliferation Treaty, and argue Canada should hold out for stringent conditions in any bilateral accord.

In an interview from India, AECL chief executive Hugh MacDiarmid said the Crown-owned company is hopeful of getting major service work on the country's aging fleet of heavy-water reactors, and potentially even the sale of a new reactor.

The AECL group met with senior officials from India's Department of Atomic Energy, and from the Nuclear Power Corporation of India Ltd., which has said it intends to build or buy up to 20 reactors over the next 12 years.

"We've been greeted very warmly," Mr. MacDiarmid said, concluding a six-day visit to India and China. He said Indian heavy-water reactor technology has not kept pace with Western companies, and AECL - one of the few companies that also deal in heavy-water reactors - could help modernize it.

"They feel there is a mutual benefit to be had. We do believe there is potential for us to be marketing our reactor technology in this country," he said.

AECL's own future remains very much in doubt as the federal government is reviewing its ownership and considering selling off the 60-year-old Crown corporation, either entirely or to a minority partner. Yesterday, Finance Minister Jim Flaherty said the government is looking at selling some Crown corporations - without mentioning names - in order to balance the federal books.

Whether it sells AECL or keeps it, Ottawa is keen to put the company on a stronger commercial footing, and that means ensuring it has access to growing emerging markets such as India's.

In addition to AECL's interest, Canada's broader nuclear industry is eager to see the Indian market open up to them, as is Cameco Corp., the Saskatchewan-based uranium producer that has been prevented from selling fuel to India.

Activist Ernie Regehr of Project Ploughshares said the Indian exemptions undermine the international Non-Proliferation Treaty by sending the message that countries can flout the rules and still co-operate on civilian nuclear uses. He worries the decision by the Nuclear Suppliers Group in September may reignite an arms race with Pakistan, which has reacted angrily to the move.

A spokeswoman for Foreign Affairs confirmed the two sides had "informal" discussions last month and expect to schedule formal sessions soon. She said Canada signalled its support for India's re-engagement with the broader nuclear-energy community when it backed the suppliers' group decision.

"India is a responsible democracy that shares with Canada the fundamental values of freedom, democracy, human rights and respect for the rule of law," government spokesman Lisa Monette said. "India has made substantial non-proliferation and disarmament commitments to achieve the trust of the Nuclear Suppliers Group, which were reiterated in a political statement on Sept. 5."

Mr. Regehr said India has made political commitments, such as agreeing not to test nuclear weapons, but has refused to sign the Comprehensive Nuclear Test Ban Treaty. It has also insisted on the right to stockpile uranium, which Mr. Regehr says would provide it with an assured fuel supply should it again run afoul of the international suppliers group.

Australia, which along with Canada is one of the world's major uranium miners, is refusing to sell the fuel to India unless it signs the Non-Proliferation Treaty. Mr. Regehr said Canada should do likewise.