Political clock ticks against India-U.S. nuclear deal

By Y.P. Rajesh - Analysis

NEW DELHI (Reuters) - A historic nuclear energy deal between India and the United States is hanging in the balance due to political opposition in New Delhi, but could still be saved if it reaches the U.S. Congress early next year, analysts said.

Communist allies of Prime Minister Manmohan Singh's coalition have demanded the deal be put on hold until their concerns are addressed and have implied they would end their support for the government, triggering fears for the pact.

Both sides are trying to buy time, looking for a face-saving way out of the crisis as neither is considered keen to see the government fall or face polls at the moment.

But having come this far, neither is blinking either.

The deal needs one final approval from the U.S. Congress to go through. But with Washington entering an election year in 2008, the clock is ticking fast, officials and analysts in New Delhi and Washington said.

The communists have demanded India put off negotiations for key global approvals for the deal, required before it can be presented to Congress.

But a delay would imperil the agreement, which would then have to struggle to make it over the din of the U.S. election campaign and tight Congressional schedules.

"If we don't get the agreement up to Congress by April at the very latest, it is unlikely to be acted on (during) the remainder of the Congress," said a congressional aide.

"The presidential campaign is just going to swamp everything else and crowd things out for the calendar," he told Reuters, noting Congress was likely to give precedence to spending bills needed to keep the government running.

BONANZA FOR U.S. FIRMS

The deal, seen as the cornerstone of a new strategic partnership between the once-estranged democracies, will allow India to access nuclear fuel and reactors from the U.S., and eventually other nations, even though it has tested nuclear weapons and not signed the Non-Proliferation Treaty.

For India, it will end over three decades of global nuclear isolation and help meet its soaring energy needs in what is seen as one of its biggest foreign policy triumphs in decades.

For U.S. nuclear firms, it opens up the Indian market, estimated to be worth $100 billion, as New Delhi aims to boost its nuclear power capacity to 30,000 MW over the next 20 years from around 3,500 MW now.

But the communists, known for their traditional anti-Americanism, say it impinges on India's sovereignty and imposes U.S. hegemony.

They want the government not to proceed with negotiations on an agreement to place its civilian reactors under International Atomic Energy Agency (IAEA) safeguards, something the government plans to conclude in November.