Australia backflips on uranium to India

resh from her Asia-Pacific Economic Forum meeting in Hawaii and on the eve of President Barack Obama’s arrival in Canberra on November 15, in an opinion piece published in an Australian newspaper, Prime Minister Julia Gillard announced that at the next month’s Labor Party annual convention she would seek support from her party to end the ban on exports of uranium to India.

Gillard’s sudden and surprising backflip will most definitely bring smiles in political and policy circles in India and many in Australia will also be celebrating this announcement.

But the Greens’ leader Bob Brown, whose support for the Gillard government remains crucial, has already warned in his typical language that uranium sales to India would lead to a “nuclear

arms race”. The left wing of Labor also opposes this move but the views of both are likely to be inconsequential at the Labor annual conference next month.

The opposition Liberal Party led by Tony Abbott will wholeheartedly support this reversal and even ridicule and make a mockery of the Labor leadership as Abbott’s conservative party then in government led by John Howard before Labor won office in 2007 had already announced its intention to sell uranium to India.

Since the newly installed Labor government under Kevin Rudd overturned Howard’s policy on uranium exports to India, Abbott and his team have been staunchly critical of Labor on this issue and have been urging the government to reconsider its stance on India.

Like her predecessors, until her announcement, Gillard steadfastly followed her party’s long-held policy of not exporting uranium to any nation that has not signed the nuclear Non-proliferation Treaty (NPT), which India has not although it is a nuclear weapons power. Explaining why she now favors exporting uranium to India, she cited that the ban on Australia exporting uranium to India for peaceful purposes was “all pain with no gain”.
The Labor pain came from different quarters leaving Gillard finally with no option but to deliver an announcement that in her calculations would lead to political, strategic and economic gains.
When Prime Minister Manmohan Singh did not sign up for the October 2011 Commonwealth Heads of Government meeting in Perth, the Australian media and many public opinion makers vehemently criticized Gillard for continuation of the ban on exports of uranium to India.

The argument this time as before was that it did not make any sense to export the yellow cake to authoritarian China, a signatory of the NPT but whose proliferation record remains doubtful.

While not a signatory to the NPT, India is a democratic country with transparent political institutions and whose proliferation record remains clean. By not changing its archaic policy, Canberra is sending wrong signals to New Delhi and hindering Australia’s closer ties with India.

Furthermore, the Australian business community has for long also lobbied the government to lift the ban as the mining industry can easily feel how much they were losing through this ban while other countries were taking advantage of the expanding India’s energy markets.

Speaking in Canberra on Monday, Gillard said Australia plans to supply 40% of India’s rising energy needs through nuclear energy, adding, “This new and growing market is good for Australian jobs.”
While the spot price of uranium fell to below $50 a pound after Japan’s Fukushima disaster in March, compared to over $140 in 2007, Canberra has forecast uranium exports to rise from around 10,000 tonnes a year to 14,000 tonnes in 2014, worth around A$1.7 billion (US$1.74 billion).

Reuters reports that BHP Billiton, which is planning a major expansion of its Olympic Dam copper and uranium mine, would review its sales position on India if the government changed policy. India plans to add nearly 30 reactors over the next 20 years to its current 20, which produce only a fraction of the country’s electricity and operate at about half capacity due to a lack of fuel.

The diplomatic snub by India through Manmohan’s absence in Perth was difficult for Australia to dismiss lightly. Since 1986, no Indian prime minister has visited Australia, despite India’s rising strategic importance to Australia and strengthening of its commercial and other ties with India. For Australia, the lack of an Indian prime ministerial visit remains a major diplomatic deficit in its Asia strategy.

For the same reasons that convinced the US to make India an exception and sign a bilateral civilian nuclear deal, many from business, politics, policy and public opinion circles in Australia have been arguing the case of an India exception. But Labor leaders were unwilling to shift from their high moral ground publicly until when the pain became unbearable for the Labor leadership.

Apart from the commercial gains for the mining companies in Australia that are in the process of developing new uranium sites in South Australia, this announcement has huge symbolic significance for India with policy and strategic implications for many countries around the world. India does not depend on Australia for uranium and can source it from other countries. But Australia’s refusal to sell uranium to India has annoyed New Delhi and it remained a constant negative in the bilateral relationship.

With Australia’s recognition of India as an exceptional case, pressure on Japan is now likely to grow for it to make India an exception as well and allow Japanese companies to sell nuclear technology to India in collaboration with partners in the US and France. Many politicians and policymakers in Tokyo already favor granting India such a status; their voice will become even stronger with Australia’s changed stance.

While the United States, Australia and other countries publicly reject the notion that these nuclear policy changes are designed to befriend India as a counter-balance to China’s growing military and economic power, it is no secret that these countries have expressed concerns about China’s recent military assertiveness, especially through Beijing’s naval activities in the South China Sea.

China’s actions have unsettled and unnerved many smaller countries in the Southeast Asian region and it is in this context that the United States has recently reasserted its interests in the Indo-Pacific areas.

Asia Times