India at an impasse over civilian nuclear deal

India's government averted a political crisis on Wednesday by delaying action on a key nuclear deal with the United States that threatens to topple the government.

Prime Minister Manmohan Singh is battling his coalition government's Communist allies over a long-delayed deal on nuclear power and technology that he agreed to with President Bush in 2005.

On Wednesday, Mr. Singh's government, which is led by the Congress Party, held a make-or-break meeting with its communist allies. Foreign minister Pranab Mukherjee emerged from the talks to tell reporters the two sides would meet again in a fortnight, thus making passage of the nuclear deal increasingly unlikely.

The nuclear agreement, which would give India access to US nuclear fuel and technology even though it has not signed the nuclear nonproliferation treaty, is at the heart of a new strategic partnership between India and the US.

It is opposed by the Communists who object to close ties with the US on ideological grounds and who argue that it will weaken India's foreign policy and independence.

Singh, however, believes that while the issue is hardly a vote winner, the deal is of seismic importance to India, where an energy shortage threatens to curtail economic growth.

Communists threaten pullout

The Communists, who support the government though they are not part of it, have threatened to withdraw that support if Singh pushes ahead with the nuclear deal.

Singh has sworn to continue with the agreement, which he argues is vital to India's interests. Last week, Indian newspapers carried reports that the prime minister had threatened to resign if the deal failed.

But on Wednesday, the political considerations of the government appeared to take priority over Singh's principle, even though time is fast running out for the nuclear deal.

US State Department officials have said that India's Parliament will need to ratify New Delhi's commitment to the agreement in June in order for the US Congress to make the pact into law before Bush leaves office.

"The government cameto the brink today and stepped back," says Mahesh Rangarajan, a political analyst in New Delhi. "It has bought itself time. I don't think any of these guys – the government or the Communists – are ready for an election."

The government is anxious to avoid early elections right now because inflation is running at a 13-year high.

Even though India's next elections must be held by May 2009, and early emergency polls would be unlikely to take place before November at the earliest, the government wants time to bring food prices under control. The price of rice is of far greater interest than multilateral agreements to Indians, half of whom live on less than $2 a day.

Some analysts argue that time for the nuclear deal may have already run out.

Even before Congress approves the deal, it needs clearances by the International Atomic Energy Agency (IAEA) and the 45-nation Nuclear Suppliers Group (NSG). Last month, US Sen. Joseph Biden, ranking Democrat on the Senate Foreign Relations Committee, said the deal was unlikely to be approved during Bush's term.

"There is no time left now," says Brahma Chellaney, a professor of strategic studies at the Centre for Policy Research in New Delhi. "If the prime minister wants to get the deal completed he has no time left."

Because the deal would give India access to US nuclear fuel and technology, it is widely seen as advantageous to India and brokering it is regarded as a great achievement for Singh.

The deal would also engender closer ties between New Delhi and Washington and enhance India's international prestige. Reneging on the deal, many say, will have the opposite effect.

For a government that has faced a string of setbacks in recent weeks, risking early elections has, so far, proved too much of a risk.

Food crisis compounds impasse

On Tuesday night, India's central bank unexpectedly increased interest rates for the second time in two weeks.

Last week, a key government ally, a charismatic Dalit politician known as Mayawati, withdrew her support for the government because of a concern over rising food prices.

In May, the Congress Party that leads the coalition lost to the opposition Bharatiya Janata Party (BJP) in elections in the southern state of Karnataka.

Not only was this the party's ninth loss in the 11 state elections held since January 2007, it was also the first time the Hindu nationalist BJP – traditionally a party of the north – had won in South India.

Analysts say, however, that deferring decisive action on the nuclear deal will not make it any less painful when the time comes.

The communists are adamant they will not allow the deal to go ahead while they are supporting the government.

Either Singh must go it alone, and risk early elections, or give up what he appears to have staked his legacy on, if he hasn't done so already.

The leader of the Congress party, Sonia Gandhi, has a third option, says Professor Chellaney: "to replace Manmohan Singh with a new leader. But it doesn't have a fourth option."