Nuclear nations approve disputed India trade waiver

(Adds U.S., British reaction)

VIENNA, Sept 6 (Reuters) - Forty-five nations approved a U.S. proposal on Saturday to lift a global ban on nuclear trade with India in a breakthrough towards sealing a U.S.-Indian atomic energy deal.

One hurdle remained before the U.S.-India deal can take force -- ratification by the U.S. Congress. It must act before adjourning in late September for elections or the deal could be left to an uncertain fate under a new U.S. administration.

The U.S.-India deal raised international misgivings since India has shunned the Non-Proliferation Treaty (NPT) meant to stop the spread and production of nuclear weapons and mandate gradual disarmament, and a companion test ban pact.

Washington says the fuel and technology deal would forge a strategic partnership with the world's largest democracy, help India meet rising energy demand in an environmentally sound way and open a nuclear market worth billions of dollars.

Nuclear Suppliers Group nations adopted a one-off waiver allowing them to do business with India after several small NSG states agreed under heavy U.S. pressure to weaker language than they had sought to ensure India does not test atom bombs again.

After two weeks of meetings and long-distance consultations, resistance to the exemption finally crumbled when six holdout states reluctantly accepted an Indian declaration on Friday reinforcing a commitment to a voluntary test moratorium.

It also said India -- whose regional rival Pakistan also has nuclear firepower outside the NPT -- would not join any future nuclear arms race, would permit broader U.N. inspections and adhered to the NSG anti-proliferation export control regime.

The NSG consensus was also based on "a number of understandings" against exports of fuel-enrichment technology able to produce peaceful energy or bombs, diplomats said.

Indian Prime Minister Manmohan Singh greeted news of the waiver with delight, saying: "This is a forward-looking and momentous decision.

"It marks the end of India's decades-long isolation from the nuclear mainstream and of the technology denial regime," he said in a statement. "The opening of full civil nuclear cooperation between India and the international community will be good for India and for the world."

U.S. Secretary of State Condoleezza Rice said: "It's a really very big step forward for the non-proliferation framework."


Britain's Foreign Secretary David Miliband said: "We believe it will make a significant contribution to energy and climate security, as well as developmental and economic objectives, for India and the International Community."

But a European diplomat in the Vienna gathering said: "For the first time in my experience of international diplomatic negotiations, a consensus decision was followed by complete silence in the room. No clapping, nothing.

"It showed a lot of us felt pressured to some extent into a decision by the Americans and few were totally satisfied."

Diplomats said the final draft cited only the need for a special NSG meeting if India reneged on its commitments.

"The problem here is that the NSG works only on the basis of consensus. So if India did another test the follow-up meeting could be reduced to a talkshop by any one member like the Americans," said another diplomat.

"It's not clear we could take action as a group."

A senior pro-waiver diplomat said: "It was an incredibly complicated political and technological negotiation. In the end 45 countries came together to support Indian energy requirements and welcome it into the world's non-proliferation mainstream."

"NPT RIP (rest in peace)?" said another, dismayed diplomat.

NSG critics and disarmament campaigners fear Indian access to nuclear material markets will let it tap into more of its limited indigenous resources, such as uranium fuel, to boost its nuclear arsenal, and drive Pakistan into another arms race.

Intense U.S. pressure for the waiver involved overnight phone calls to presidents and prime ministers of holdout countries, several diplomats said.

Six NSG nations had been demanding a clause stipulating an automatic cessation of the waiver if India tested another bomb. (Editing by Janet Lawrence)