WikiLeaks exposes gov't lies, shifts on India uranium deal

December 7, 2014
Anti-nuclear protest in Japan in March. India's attorny-general said in 2012 that India could face a Fukushima-like nuclear disa

Prime Minister Tony Abbott signed an agreement in September to allow sales of Australian uranium to India for the first time. Uranium sales were initially approved by then-Coalition PM John Howard in August 2007 but Howard’s successor, Kevin Rudd, reinstated the ban.

Rudd’s action was in accordance with long-standing Labor Party policy that uranium should only be sold to countries that have signed the Nuclear Non-Proliferation Treaty (NPT). A 2008 Lowy Institute poll found that 88% of Australians supported this policy.

By the end of 2011, however, Labor had switched to the Liberal Party’s position at the behest of Rudd’s successor, Julia Gillard.

As US diplomatic cables published by WikiLeaks show, both parties were ultimately willing to change Australia’s long-standing nuclear policy to aid the Australian uranium industry and match strategic US objectives.

NSG exemption

Under Rudd, the issue of uranium sales was closely tied to the question of whether the new Labor government would support an agreement at the Nuclear Suppliers Group (NSG) to allow international nuclear trade with India.

The US and India wanted the NSG to exempt India from its requirement that transfers of nuclear technology be made only to countries which have a comprehensive safeguards agreement with the International Atomic Energy Commission.

Failure to secure this exemption would have killed the US-India civil nuclear agreement and set back US attempts to establish a strategic alliance with India.

US and India undertook a three-year campaign to win the support of NSG countries, including Australia, before the NSG decision in August 2008.

The US Embassy in Canberra regarded Rudd as a strong supporter of the US alliance. But there was concern over whether Labor’s nuclear policy would stop Australia supporting the US position at the NSG.

The cables show that pressure on the Rudd government to back the exemption came from the Australian High Commission in India as well as the US. They reveal how Labor’s official position on nuclear matters differed from the private views of individual members of the government.

This made the government’s support for the exemption and the party’s eventual approval of uranium sales in 2011 all but inevitable.

Rudd government

Shortly after Rudd took office in December 2007, the US Embassy in Canberra reported that Rudd had declined to say in a meeting with the US Ambassador whether Australia would support the NSG exemption. He promised “to bring clarity earlier rather than later”.

In the same period, US Undersecretary of State for Political Affairs Nicholas Burns held a series of meetings with other members of the Australian government where he emphasised the “high importance” the US attached to the agreement.

According to a cable reporting on the meetings, new foreign minister Stephen Smith, like Rudd, “reiterated his government's refusal to sell uranium to India until it signs the NPT but was noncommittal on whether the GOA [government of Australia] would block consensus in the NSG”.

In another meeting, Department of Foreign Affairs and Trade secretary Michael L’Estrange suggested that Smith personally supported the US-India civil nuclear deal. But he warned that “the Labor government's campaign positions on not selling uranium to India as a non-signatory to the NPT could complicate the NSG diplomacy”.

The cable reported that L’Estrange had told Burns that “new FM Smith was from Western Australia and wished to boost ties with India to a new level”. At this time, India had become one of WA’s largest export destinations, with exports growing by on average 57% a year in the decade up to 2009.

Western Australia also has large uranium reserves, although a state-wide ban on uranium mining was in place between 2002 and 2008.

Australian High Commission

Efforts to secure international support for an NSG exemption intensified in 2008 as the Indian government continued to battle opposition to the nuclear deal from the left parties in the ruling coalition.

The Indian and US governments hoped this support would “emphasise the multilateral, non-U.S. aspect of the initiative to its Communist coalition partners”, undermining arguments that India was becoming a tool of US imperialism.

In a measure of the importance the US placed on its budding new relationship with India, the US Embassy in New Delhi even welcomed a visit to India by Washington’s arch-enemy, Iranian President Mahmoud Ahmadinejad.

In April 2008, US Charge d'Affaires Steven White wrote: “Ahmadinejad’s transit through Delhi will provide reassurance to the America-haters that India’s foreign policy remains ‘independent’ of the U.S.”

Australian High Commissioner to India John McCarthy wanted the Rudd government to play a part in these efforts, as Howard had with his timely announcement that Australia would lift its ban on uranium sales in 2007.

On January 28, 2008, a cable from the US Embassy in New Delhi, entitled “India tries to outflank Communists with global nuclear push”, reported that Britain and France strongly supported the NSG exemption, China’s support was tentative, while Australia and Canada “still have concerns”.

A few days later, another New Delhi cable reported that McCarthy had delivered an “aggressive” message on the NSG issue to US Ambassador David Mulford.

McCarthy had “speculated that the Cabinet would consider the NSG decision positively” and said, “I do not see them going off and playing footsy with New Zealand and Ireland” (two countries that oppose the NSG exemption).

However, to “push the Australian government in the right direction”, McCarthy urged Mulford to “ensure that the U.S. continue pressuring the new Australian leadership to support an Indian exception in the Nuclear Suppliers Group”.

McCarthy said it was “important for India and Washington to keep making their views known at the high level”. He advised Mulford that the US-India deal should be “number two or three in your talking points, not number seven or eight”.

Mulford said McCarthy’s support for the deal, “despite his government’s reticence on its position”, reflected the fact that “most NSG member country chiefs of mission ― and even several non-NSG countries ― have zeroed in on the imminent NSG decision as a moment that could define their country’s relationship with India in the 21st century”.

McCarthy and his fellow diplomats “know the stakes”, wrote Mulford, and could “see the wider picture”.

McCarthy left the foreign service in 2009. Since 2011, he has been employed by consultancy firm Dragoman Global, where his experience influencing governments may prove useful.

Run by former BHP executives Tom Harley and John Fast, Dragoman describes itself as a “risk advisory firm”, but keeps the details of its business under wraps.

In 2010 Harley deflected a question about whether his former employer, BHP, is a client of Dragoman, citing client confidentiality.

Services offered on the company’s website include “assisting corporations to develop strategies to deal with Governments and other public sector bodies” and “[a]ccessing mining and exploration rights and petroleum permits”.

As news website Crikey noted in 2011, “[t]he mysterious Dragoman’s raison d’etre appears to be opening doors for multinationals in developing countries”.

Secret support

The Rudd government’s public position before the NSG meeting in August 2008 was that it would consider the arguments on both sides and then decide whether to support the exemption. On July 24, 2008, Smith stuck to the official line during a joint interview with US Secretary of State Condoleezza Rice, saying “we haven’t made a decision”.

However, the cables suggest the government had already decided to support the exemption.

In February 2008, a cable from Canberra reported that defence minister Joel Fitzgibbon had told the US during the annual Australia-US Ministerial Consultations (Ausmin) meetings that “both he and Smith are personally supportive of such enhanced cooperation with India, but that to succeed, they would need to approach the political aspects of the issue sensitively”.

On June 26, 2008, Mulford reported from New Delhi that Australia was “on board” for the NSG. India’s foreign secretary, Shivshankar Menon, had told Mulford that Rudd had “cleared the room” during a recent meeting with Indian external affairs minister Pranab Mukherjee in Australia and told Mukherjee privately, “when it comes to the NSG, we're on your side”.

Only a fortnight earlier, Rudd had visited Hiroshima in Japan, where he made an emotional speech urging the “community of nations” to prevent the disintegration of the NPT, and announced that Australia would form a new international commission on nuclear disarmament.

On July 7, 2008, Mulford reported that he had met with McCarthy, who had noted Rudd’s assurances to Mukherjee. Mulford said: “I'd be astonished if Australia did anything other than sit quietly in the NSG.”

McCarthy said Australia's “public position” prior to the NSG decision would be to “take into account Australia’s relationship with India and the U.S. in coming to its decision”.

During the July 24 interview, Smith said: “We will give very careful consideration to the strategic importance of the agreement, both to India and to the United States, and we’re also looking at the arrangement with a positive and constructive frame of mind.”

A few days before the August 21-22 NSG plenary, a cable from the US Embassy in Canberra reported that Smith had told the US ambassador that the Australian government would support the US at the NSG and “does not need further information and will not require any conditions”.

The embassy had also spoken to Rudd’s advisor, Gary Quinlan, who promised that Australia “will not stand in the way”.

After several days of deliberation and more intense US lobbying, the NSG approved the exemption on September 6, 2008. A cable reported that Canada's ambassador to the United Nations, Marius Grinius, said “most NSG members ‘gave up’ and ‘joined the bandwagon’ rather than fully supporting a nuclear agreement with India”.

The NSG decision opened the door to uranium sales to India. But while the Rudd government supported this exemption, its public position remained that Australia would not sell uranium to India unless it joined the NPT. On a visit to India shortly after the NSG decision, Smith said this policy “remains unaffected by the NSG decision”.

However, US diplomatic cables published by WikiLeaks suggest Labor leaders were already preparing to change its policy.

By the time Rudd took office in late 2007, India had assumed increasing significance to Australian foreign policy-makers.

Diplomatic relations had warmed in parallel with the Bush administration’s push for closer US-India ties, and the Howard government had increased military-to-military engagement.

Economically, India was a rapidly growing market for Australian exports and bilateral trade had grown by about 30% a year.

Uranium ban

However, the Rudd government’s ban on uranium sales continued to generate frustration on the Indian side.

In January 2008, the US Embassy in New Delhi reported that McCarthy had said that Smith’s “emphasis on the uranium issue” during a visit by Indian Special Envoy Shyam Saran to Perth had “irritated the Indians”.

Smith had opened a press conference by reiterating his government’s policy of not selling uranium to India.

McCarthy told the US ambassador that he and Smith had “since attempted to clarify to the Indian media that while the uranium sales ban exists now, the Australian government may consider sales in the future”.

McCarthy said he had later briefed trade minister Simon Crean during a visit to Delhi on January 17 “to avoid the pitfalls that Smith encountered”. In McCarthy’s opinion, Crean had later successfully conveyed that “uranium sales are possible over a period if the nuclear deal goes through”.

This message to India was clearly at odds with the Rudd government’s message to the Australian public that it would only consider uranium sales if India joined the NPT. Another cable suggests that Rudd wanted this policy to change.

The US ambassador in New Delhi reported that McCarthy believed the policy was “an entrenched Labour Party [sic] platform, rather than a cabinet decision, that would take some time to change despite PM Rudd's private desire for it to do so”.

In October 2009, the US Deputy Chief of Mission (DCM) in Canberra outlined other factors that the embassy believed could change the government’s nuclear policy in a cable entitled “Uranium mining set to take off”.

In 2007, the federal Labor government had abandoned its “three-mines policy” and in 2008, the Coalition government of Western Australia had lifted the state’s ban on uranium mining. Meanwhile, global demand for uranium had risen.

Consequently, the cable reported: “The uranium industry claims there is a potential to increase exports fourfold.”

The DCM noted that the Rudd government was “officially” opposed to the development of nuclear power in Australia, as well as being opposed to selling uranium to non-NPT countries and hosting international nuclear waste in Australia.

However, the DCM reported: “Some Opposition MPs want consideration of nuclear power, as does the powerful Australian Workers Union (privately some ALP MPs do as well)”.

The DCM wrote that Australia’s shadow resources minister had said that the Australian government “is not as opposed to the nuclear industry as portrayed and is prepared to revisit the policy should public opinion turn”.

According to the DCM, this was “a view shared by others”. At the time, the Coalition's shadow resources minister was Ian Macfarlane.

The DCM concluded that “the growth of uranium mining and the climate change debate will likely provide opportunity for issues such as nuclear waste storage and nuclear energy to gain a higher profile”.

According to another cable from Canberra, federal resources minister Martin Ferguson confirmed to US Ambassador Jeffrey Bleich that the ALP’s policy could change.

Bleich wrote in November 2009 that in Ferguson’s view, “the recent expansion in uranium development in Australia reflected a shift in willingness to consider nuclear energy”.

Additionally, according to the cable, Ferguson had said that the Australian government might have to revisit the issue of nuclear energy if other technologies “failed to develop commercially quickly enough” for Australia to meet its “clean” energy goals.

Moreover, Ferguson had told Bleich that he had “personally supported the US-India nuclear agreement” and believed that “a deal to supply India with nuclear fuel could be reached in 3-5 years”.

These comments contradicted his party’s official position at the time, but Ferguson's support for the uranium industry was no secret. He led efforts to overturn Labor’s three-mines policy at the party’s 2007 conference.

After his comments on India in this cable were divulged by Fairfax in February 2011, Ferguson side-stepped questions and repeated the official line, saying: “We will only supply uranium to countries that are signatories to the NPT and have signed a bilateral agreement with Australia.”

Corporate advice

US diplomats in Australia also consulted representatives of mining giant BHP for their views on the industry and the prospect of uranium sales to India.

In April 2009, a cable from the US Consulate in Melbourne reported that BHP manager for integrated planning Barry Hewlett had told the consul-general that “India represents a potentially massive market” for the uranium in BHP’s Olympic Dam mine.

However, in November 2009, another cable from the consulate in Melbourne reported comments by BHP CEO Marius Kloppers that suggested the renewed international nuclear cooperation with India permitted by the NSG waiver was more important to BHP than the Australian government’s position on uranium exports.

“As long as someone can sell to the Indians,” Klopper said, “the world market will continue to expand, which helps us.”

Ferguson’s prediction in relation to uranium sales turned out to be true. In November 2011, Gillard announced she would push for the ALP to change its policy at its December party conference.

Gillard’s decision was motivated in part by a desire to help the uranium industry recover from the effects of the March 2011 Fukushima nuclear disaster. Demand dropped in the wake of the disaster and the price of uranium plummeted.

Smith publicly backed Gillard ahead of the vote. Smith said Rudd also supported the policy change. With the help of Ferguson and Australian Workers Union head Paul Howes, Gillard was able to overcome the opposition from the party’s left and the conference voted narrowly to allow uranium sales to India.

The decision was not supported by the Australian public. A 2012 opinion poll by the Lowy institute found that 61% of Australians opposed uranium sales to India, with only 9% strongly in favour.

Nevertheless, the Gillard government began talks with India on a bilateral nuclear safeguards agreement in March last year, which were concluded by Tony Abbott in September.

India's record

Both Labor and the Coalition claim India has an “impeccable” record on non-proliferation and therefore deserves an exemption from the rules that apply to other states. This is not true.

India’s new status as a “responsible nuclear state” is more a reflection of the power of the US to influence international bodies, like the NSG and the International Atomic Energy Agency, to do favours for its friends and punish its enemies.

India chose to stay outside the NPT so it would be free to develop nuclear weapons. India’s first nuclear test in 1974 was carried out using plutonium from a nuclear reactor supplied by Canada strictly for civilian purposes.

The US and Australia imposed sanctions on India after it carried out another series of nuclear tests during its escalating arms race with Pakistan in 1998.

Australia will now contribute to spreading nuclear weaponry as India will be able to use Australian-supplied uranium for civilian purposes and reserve its indigenous supplies for its nuclear weapons program.

Moreover, India has a poor nuclear safety record. In 2012, the country’s auditor-general warned that a Fukushima-like disaster could result from the absence of effective industry regulation.

Having witnessed the health and environmental effects of that disaster, David Sweeney of the Australian Conservation Foundation described the decision to sell uranium to India as a “retreat from reason”.

But neither the Coalition nor Labor would let reason get in the way of Australia’s alliance with the US or the interests of Australian corporations mining uranium. In dispensing with long-standing nuclear policy towards India, both parties have highlighted the double-standard at the heart of US and Australian nuclear policy.

The US has pushed for India, a non-NPT state, to be allowed to take part in global nuclear trade while simultaneously threating war and imposing sanctions on Iran, an NPT signatory, over its civilian nuclear program. Australia has backed both efforts to the hilt.

[This is the second part of a two-part special on WikiLeaks cables on the background to Australia's decision to sell uranium to India. Part one can be read here.]

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